Insurance legal updates from Shoosmiths LLPhttps://www.shoosmiths.co.uk/rss/5688.aspxInsurance legal updates from Shoosmiths LLPen-GBShoosmithshttps://www.shoosmiths.co.uk/-/media/shoosmiths/shoosmiths-rss-image.jpg?h=144&w=144Insurance legal updates from Shoosmiths LLPhttps://www.shoosmiths.co.uk/rss/5688.aspx60{FC459DA3-8198-4FCF-BFE1-364285418361}https://www.shoosmiths.co.uk/client-resources/legal-updates/metoo-risks-liability-insurers.aspx#MeToo: Risks for liability insurers and their insureds<span>One year on from #MeToo, Bloomberg estimates at least 425 prominent people across industries had been publicly accused of sexual misconduct.</span>Fri, 18 Jan 2019 00:00:00 Z<![CDATA[Susannah Wakefield]]><![CDATA[<span>One year on from #MeToo, Bloomberg estimates at least 425 prominent people across industries had been publicly accused of sexual misconduct.</span>]]>{4B6F7434-2EF6-4885-9FB5-507FF01B3003}https://www.shoosmiths.co.uk/client-resources/legal-updates/cyber-insurance-v-gdpr-myths-maths-and-the-law-13588.aspxCyber Insurance v GDPR - The Myths, the Maths and the LawWe rarely switch on our computers without an email containing the latest guidance, opinions, dos and don'ts, risks, or the undeniable fact that the harsh penalties which are likely to flow from the GDPR from 25 May 2018 could be eye-watering.Wed, 29 Nov 2017 00:00:00 Z<![CDATA[Paul Eccles Susie Wakefield ]]><![CDATA[We rarely switch on our computers without an email containing the latest guidance, opinions, dos and don'ts, risks, or the undeniable fact that the harsh penalties which are likely to flow from the GDPR from 25 May 2018 could be eye-watering.]]>{C69396A7-1814-48B6-BD4C-7F5F8E94CE91}https://www.shoosmiths.co.uk/client-resources/legal-updates/dont-get-caught-insurance-distribution-directive-changes-13398.aspxDon&#39;t get caught out by Insurance Distribution Directive rule changes The Insurance Distribution Directive (IDD) will introduce a new regime for those involved in insurance sales, even if selling insurance is not your primary business. The IDD is due to be transposed into UK domestic law by 23 February 2018. The government has made clear that the UK will implement the IDD regardless of the ongoing Brexit negotiations. The FCA has recently published 'near final' versions of its proposed rules to implement the changes, so now is the time to make sure you will be in a position to comply when the new regime comes into force.. What is the IDD and will it affect your business? The IDD is designed to build on the current framework regulating insurance sales. It aims to strengthen insurance customer protection, create a level playing field for all those involved in insurance sales and encourage cross-border trading. It will also apply to all businesses involved in the insurance supply chain, including where insurance is sold alongside other products. The IDD will generally increase the requirements placed upon those involved in distributing insurance, although a limited range of companies will now be subject to reduced levels of regulation. As such, the implementation of the IDD presents a good opportunity for businesses to review their current processes and assess them against the incoming requirements. What will the main changes be? The FCA is proposing to build on the current framework, which is largely contained in the FCA Handbook, rather than starting from scratch. While the changes introduced by the IDD are likely to bring about an evolution, rather than a revolution, of the UK framework, there will still be significant changes in a number of areas, including: Scope of the regime - the majority of businesses involved in insurance sales will face additional requirements under the new regime, including connected travel insurance providers such as travel agents and airlines. The so-called 'connected contracts exemption', under which certain companies (typically retailers of consumer goods other than motor vehicles) selling straightforward ancillary insurance do not need to be directly authorised, will be broadened slightly. However, new obligations will be placed on firms distributing via such retailers to ensure that these retailers comply with the more basic aspects of the new regime, so that these companies will actually now indirectly face additional requirements. Finally, businesses which introduce potential customers to insurers and vice versa may be able to benefit from a new exemption under the IDD, but only if they merely pass information on and take no further steps to assist in the conclusion of insurance contracts; Pre-contract disclosure - additional information will have to be provided to customers before a sale is completed, including a prescribed form called an Insurance Product Information Document for consumers and various further information about the nature of the distributor and the remuneration arrangements in place; Demands and needs - a more interactive process will be required to assess the customer's demand and needs. Generic statements of demands and needs will only be acceptable in certain limited scenarios; Cross-selling - there will be new requirements in relation to the information which has to be provided to customers where an insurance product is sold alongside another product; Staff competence requirements - the IDD introduces strict requirements in relation to the levels of knowledge and competence of staff working for insurers and intermediaries. This includes an obligation on a broad range of employees directly involved in selling insurance to undertake a minimum of 15 hours of continuing professional development (CPD) per year; Conflicts of interest - new requirements are due to be brought in around the conflict policies businesses have in place and how conflicts of interest are disclosed to customers. These rules will now apply to insurers as well as intermediaries. What action needs to be taken? Now that the FCA has published its first set of 'near final' rules, it is important that businesses involved directly or indirectly in insurance sales start considering the changes which are coming in. The proposed changes are fairly significant and will inevitably require processes to be updated, which is likely to take some time. The FCA has made clear that it thinks businesses should be preparing for the changes now, so that they are prepared for the new regime as soon as it comes into force. The introduction of these new rules gives businesses an opportunity to review their current processes and assess where they fit within the new regime, including corporates who sell insurance alongside other products. Our dedicated insurance regulatory team is well placed to assist if you have any queries about how these changes may impact your business. DisclaimerThis document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.Thu, 12 Oct 2017 00:00:00 +0100<![CDATA[Stephen Dawson Matthew Brown ]]><![CDATA[ The Insurance Distribution Directive (IDD) will introduce a new regime for those involved in insurance sales, even if selling insurance is not your primary business. The IDD is due to be transposed into UK domestic law by 23 February 2018. The government has made clear that the UK will implement the IDD regardless of the ongoing Brexit negotiations. The FCA has recently published 'near final' versions of its proposed rules to implement the changes, so now is the time to make sure you will be in a position to comply when the new regime comes into force.. What is the IDD and will it affect your business? The IDD is designed to build on the current framework regulating insurance sales. It aims to strengthen insurance customer protection, create a level playing field for all those involved in insurance sales and encourage cross-border trading. It will also apply to all businesses involved in the insurance supply chain, including where insurance is sold alongside other products. The IDD will generally increase the requirements placed upon those involved in distributing insurance, although a limited range of companies will now be subject to reduced levels of regulation. As such, the implementation of the IDD presents a good opportunity for businesses to review their current processes and assess them against the incoming requirements. What will the main changes be? The FCA is proposing to build on the current framework, which is largely contained in the FCA Handbook, rather than starting from scratch. While the changes introduced by the IDD are likely to bring about an evolution, rather than a revolution, of the UK framework, there will still be significant changes in a number of areas, including: Scope of the regime - the majority of businesses involved in insurance sales will face additional requirements under the new regime, including connected travel insurance providers such as travel agents and airlines. The so-called 'connected contracts exemption', under which certain companies (typically retailers of consumer goods other than motor vehicles) selling straightforward ancillary insurance do not need to be directly authorised, will be broadened slightly. However, new obligations will be placed on firms distributing via such retailers to ensure that these retailers comply with the more basic aspects of the new regime, so that these companies will actually now indirectly face additional requirements. Finally, businesses which introduce potential customers to insurers and vice versa may be able to benefit from a new exemption under the IDD, but only if they merely pass information on and take no further steps to assist in the conclusion of insurance contracts; Pre-contract disclosure - additional information will have to be provided to customers before a sale is completed, including a prescribed form called an Insurance Product Information Document for consumers and various further information about the nature of the distributor and the remuneration arrangements in place; Demands and needs - a more interactive process will be required to assess the customer's demand and needs. Generic statements of demands and needs will only be acceptable in certain limited scenarios; Cross-selling - there will be new requirements in relation to the information which has to be provided to customers where an insurance product is sold alongside another product; Staff competence requirements - the IDD introduces strict requirements in relation to the levels of knowledge and competence of staff working for insurers and intermediaries. This includes an obligation on a broad range of employees directly involved in selling insurance to undertake a minimum of 15 hours of continuing professional development (CPD) per year; Conflicts of interest - new requirements are due to be brought in around the conflict policies businesses have in place and how conflicts of interest are disclosed to customers. These rules will now apply to insurers as well as intermediaries. What action needs to be taken? Now that the FCA has published its first set of 'near final' rules, it is important that businesses involved directly or indirectly in insurance sales start considering the changes which are coming in. The proposed changes are fairly significant and will inevitably require processes to be updated, which is likely to take some time. The FCA has made clear that it thinks businesses should be preparing for the changes now, so that they are prepared for the new regime as soon as it comes into force. The introduction of these new rules gives businesses an opportunity to review their current processes and assess where they fit within the new regime, including corporates who sell insurance alongside other products. Our dedicated insurance regulatory team is well placed to assist if you have any queries about how these changes may impact your business. DisclaimerThis document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.]]>{60490583-94A4-4DD1-BE52-A4BE02B45F36}https://www.shoosmiths.co.uk/news/press-releases/seasoned-litigation-partner-joins-shoosmiths-13245.aspxSeasoned litigation partner joins Shoosmiths&#39; growing team National law firm Shoosmiths has appointed international litigation partner Susannah Wakefield to its insurance practice in London. Susie joins from Taylor Wessing in London where she was partner and head of the insurance practice. Having qualified at Cameron McKenna in 1997, Susie moved to LeBoeuf in London and spent seven years in their New York office handling complex high value (re)insurance litigation and arbitration. Susie was admitted to the New York State Bar in 2003 and remains dual-qualified. Susie then spent three years (2007 - 2010) in Bermuda as Counsel at local firm, ASW, specialising in insurance and commercial disputes, where she was admitted as a Barrister and Attorney before returning to London to accept a partnership with Taylor Wessing in 2010. Susie will be working closely with Shoosmiths' head of commercial insurance, Paul Eccles, to develop further the firm's burgeoning insurance practice which has seen significant growth in the last three years. She has a broad practice with particular expertise in commercial insurance and reinsurance work, including acting for insurers, reinsurers, intermediaries and coverholders as well as policyholders, complementing Shoosmiths' team expertise and their focus. Susie said: "Shoosmiths is a modern firm with an excellent reputation for its client service. The firm's insurance practice has grown significantly and Shoosmiths has a compelling vision in how this offering will grow, a vision which I share. I very much look forward to working with Paul and the team to further build this already successful practice." Alex Bishop, head of dispute resolution and compliance at Shoosmiths, said: "Susie has very impressive sector expertise and experience in the insurance market with the profile to match. The insurance sector represents a key growth market for DRC and the Commercial Practice Group. "As a result of a strategic focus on this sector over the last three years, insurance related fee income has increased significantly. Susie will work closely with us to build our practice and it is a delight to welcome her to the firm." In the most recent Chambers legal directory, Susie is noted for her 'Collaborative approach' and in the Legal 500 is described as an 'outstanding leader' with '.significant experience of litigation across England New York and Bermuda'. Susie is also listed in the International Who's Who of Insurance &amp; Reinsurance Lawyers 2014 - 2016 and Women in Business Law 2014 - 2016.Thu, 24 Aug 2017 00:00:00 +0100<![CDATA[Paul Eccles ]]><![CDATA[ National law firm Shoosmiths has appointed international litigation partner Susannah Wakefield to its insurance practice in London. Susie joins from Taylor Wessing in London where she was partner and head of the insurance practice. Having qualified at Cameron McKenna in 1997, Susie moved to LeBoeuf in London and spent seven years in their New York office handling complex high value (re)insurance litigation and arbitration. Susie was admitted to the New York State Bar in 2003 and remains dual-qualified. Susie then spent three years (2007 - 2010) in Bermuda as Counsel at local firm, ASW, specialising in insurance and commercial disputes, where she was admitted as a Barrister and Attorney before returning to London to accept a partnership with Taylor Wessing in 2010. Susie will be working closely with Shoosmiths' head of commercial insurance, Paul Eccles, to develop further the firm's burgeoning insurance practice which has seen significant growth in the last three years. She has a broad practice with particular expertise in commercial insurance and reinsurance work, including acting for insurers, reinsurers, intermediaries and coverholders as well as policyholders, complementing Shoosmiths' team expertise and their focus. Susie said: "Shoosmiths is a modern firm with an excellent reputation for its client service. The firm's insurance practice has grown significantly and Shoosmiths has a compelling vision in how this offering will grow, a vision which I share. I very much look forward to working with Paul and the team to further build this already successful practice." Alex Bishop, head of dispute resolution and compliance at Shoosmiths, said: "Susie has very impressive sector expertise and experience in the insurance market with the profile to match. The insurance sector represents a key growth market for DRC and the Commercial Practice Group. "As a result of a strategic focus on this sector over the last three years, insurance related fee income has increased significantly. Susie will work closely with us to build our practice and it is a delight to welcome her to the firm." In the most recent Chambers legal directory, Susie is noted for her 'Collaborative approach' and in the Legal 500 is described as an 'outstanding leader' with '.significant experience of litigation across England New York and Bermuda'. Susie is also listed in the International Who's Who of Insurance &amp; Reinsurance Lawyers 2014 - 2016 and Women in Business Law 2014 - 2016.]]>{B93167FC-65CC-4E8B-9018-24FC5DC8CC2E}https://www.shoosmiths.co.uk/client-resources/legal-updates/insurer-v-insured-certainty-is-king-12471.aspxInsurer v insured - certainty is king The Court of Appeal has provided useful insight into the meaning of the phrase 'as soon as possible' in relation to insurance policy notification obligations. How will this decision impact upon both insurers and insured parties? In Zurich Insurance plc v Maccaferri Ltd [2016] EWCA Civ. 1302, the issue before the Court of Appeal was whether the appellant insurers were entitled to reject liability under a combined product and public liability policy for an alleged breach of a notification condition precedent contained in the policy. The case required the court to consider whether the phrase 'as soon as possible after the occurrence of any event' was likely to give rise to a claim in the notification clause in the policy. Insurers lost both the first instance trial as well as the appeal. The Court decided that insurers are at full liberty to express the conditions within their policies with as much specificity as they like and, as a result, 'such conditions should be clear in order to have effect' against the insured. In this case, the ambiguity of the notifications clause was interpreted in the insured's favour especially when the potential effect of the condition was to exclude Insurer's liability for an otherwise valid claim. Background The claim arose from a related series of events in which an individual, Mr McKenna, suffered serious injuries to both eyes in an on-site accident involving a piece of industrial equipment during the course of his employment. The equipment was originally provided by Maccaferri to the well-known building merchant Jewson Ltd, who in turn hired this out to Drayton Construction Ltd - the direct employer of Mr McKenna. The incident occurred in approximately September 2011 with witness evidence at the trial suggesting that Maccaferri were aware of its occurrence from around January 2012. Mr McKenna made a claim for damages against Drayton Ltd in July 2012 as a result of the injuries he suffered during the accident. Drayton then issued an indemnity/contribution claim against Jewson in around March 2013 and Maccaferri were subsequently brought into proceedings via a Part 20 claim, made by Jewson, in July 2013. Maccaferri then notified their brokers and insurers, Zurich, of the incident. In September 2015, Zurich refused to indemnify Maccaferri for the liability arising from the series of claims which, in turn, led to the present dispute. Policy dispute The policy in question was a combined public and product liability insurance policy which covered the period from May 2011 to May 2012. The notifications clause stated that the insured must provide 'notice in writing to the insurer as soon as possible after the occurrence of any event'. Additionally, it stated that the 'insured shall also on receiving verbal or written notice of any claim intimate or send same or a copy thereof immediately [to the insurer]'. The dispute concerned the timeframe in which Maccaferri notified the insurers of the claim. Zurich submitted that Maccaferri had failed to abide by the conditions of their policy and were therefore unable to be indemnified under it. This was denied by Maccaferri. The decision The Court of Appeal held that there are two stages in deciding when an insured party is obliged to notify an insurer: there must have been an event (See Axa Reinsurance (UK) plc v Field [1976] 1 WLR 1026]) and the event must have been likely to give rise to a claim. 'Likely' has consistently been interpreted as meaning anything above 50% and not merely a possibility, as seen in judgments such as Layher Ltd v Lowe [2000] Lloyd's IR 510. Upon objective assessment, the Court decided that the knowledge of the insured is an important consideration to account for when deciding whether they were aware of the likelihood that a claim would be made against them. In this respect, a considerable amount of time may pass between the incident occurring and a likelihood of a claim actually arising against the insured. Lady Justice Black and Clarke LJ were not satisfied that there was a likelihood of more than 50% that a claim was to be brought against Maccaferri at the time of the accident; especially with witness evidence suggesting that Maccaferri were never under threat of a claim from Mr McKenna. As a result, the Court suggested that 'as soon as possible' merely indicates a period of time in which the insured must notify the insurer, but that the main decision is based upon the test applied above. Additionally, the Court stated that the insurer is in no way hindered in their ability to specify detailed circumstances and conditions for notification clauses i.e. clarity is required for effectiveness (Reference was made to Royal &amp; Sun Alliance v Dornoch [2005] EWCA Civ 238). As such, the ambiguity in this case was interpreted against Zurich. Impact This decision will be welcome news to insured parties as it reinforces the need for clarity within insurance policies in order to be effective, should a dispute arise. It is beneficial to know that the Courts are willing to protect insured parties, with potentially ambiguous policies, when they face potential liability. The decision also confirms that an obligation to notify only arises where there is a 50% (or higher) likelihood of a claim being made against the insured party. It will still be prudent to assess all insurance policies in order to determine the exact obligations required for satisfaction, to avoid the policy protection becoming void, should an incident occur. Although a positive step, this decision is by no means a clear cut way to decide whether a duty to notify the insurer has arisen. While being highly desired, but often difficult to achieve, this decision reinforces that clarity is king when it comes to contractual provisions. We have an expert commercial insurance team who are skilled at interpreting contractual provisions in insurance contracts. Please contact paul.eccles@shoosmiths.co.uk for more information. DisclaimerThis document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.Thu, 09 Feb 2017 00:00:00 Z<![CDATA[Paul Eccles ]]><![CDATA[ The Court of Appeal has provided useful insight into the meaning of the phrase 'as soon as possible' in relation to insurance policy notification obligations. How will this decision impact upon both insurers and insured parties? In Zurich Insurance plc v Maccaferri Ltd [2016] EWCA Civ. 1302, the issue before the Court of Appeal was whether the appellant insurers were entitled to reject liability under a combined product and public liability policy for an alleged breach of a notification condition precedent contained in the policy. The case required the court to consider whether the phrase 'as soon as possible after the occurrence of any event' was likely to give rise to a claim in the notification clause in the policy. Insurers lost both the first instance trial as well as the appeal. The Court decided that insurers are at full liberty to express the conditions within their policies with as much specificity as they like and, as a result, 'such conditions should be clear in order to have effect' against the insured. In this case, the ambiguity of the notifications clause was interpreted in the insured's favour especially when the potential effect of the condition was to exclude Insurer's liability for an otherwise valid claim. Background The claim arose from a related series of events in which an individual, Mr McKenna, suffered serious injuries to both eyes in an on-site accident involving a piece of industrial equipment during the course of his employment. The equipment was originally provided by Maccaferri to the well-known building merchant Jewson Ltd, who in turn hired this out to Drayton Construction Ltd - the direct employer of Mr McKenna. The incident occurred in approximately September 2011 with witness evidence at the trial suggesting that Maccaferri were aware of its occurrence from around January 2012. Mr McKenna made a claim for damages against Drayton Ltd in July 2012 as a result of the injuries he suffered during the accident. Drayton then issued an indemnity/contribution claim against Jewson in around March 2013 and Maccaferri were subsequently brought into proceedings via a Part 20 claim, made by Jewson, in July 2013. Maccaferri then notified their brokers and insurers, Zurich, of the incident. In September 2015, Zurich refused to indemnify Maccaferri for the liability arising from the series of claims which, in turn, led to the present dispute. Policy dispute The policy in question was a combined public and product liability insurance policy which covered the period from May 2011 to May 2012. The notifications clause stated that the insured must provide 'notice in writing to the insurer as soon as possible after the occurrence of any event'. Additionally, it stated that the 'insured shall also on receiving verbal or written notice of any claim intimate or send same or a copy thereof immediately [to the insurer]'. The dispute concerned the timeframe in which Maccaferri notified the insurers of the claim. Zurich submitted that Maccaferri had failed to abide by the conditions of their policy and were therefore unable to be indemnified under it. This was denied by Maccaferri. The decision The Court of Appeal held that there are two stages in deciding when an insured party is obliged to notify an insurer: there must have been an event (See Axa Reinsurance (UK) plc v Field [1976] 1 WLR 1026]) and the event must have been likely to give rise to a claim. 'Likely' has consistently been interpreted as meaning anything above 50% and not merely a possibility, as seen in judgments such as Layher Ltd v Lowe [2000] Lloyd's IR 510. Upon objective assessment, the Court decided that the knowledge of the insured is an important consideration to account for when deciding whether they were aware of the likelihood that a claim would be made against them. In this respect, a considerable amount of time may pass between the incident occurring and a likelihood of a claim actually arising against the insured. Lady Justice Black and Clarke LJ were not satisfied that there was a likelihood of more than 50% that a claim was to be brought against Maccaferri at the time of the accident; especially with witness evidence suggesting that Maccaferri were never under threat of a claim from Mr McKenna. As a result, the Court suggested that 'as soon as possible' merely indicates a period of time in which the insured must notify the insurer, but that the main decision is based upon the test applied above. Additionally, the Court stated that the insurer is in no way hindered in their ability to specify detailed circumstances and conditions for notification clauses i.e. clarity is required for effectiveness (Reference was made to Royal &amp; Sun Alliance v Dornoch [2005] EWCA Civ 238). As such, the ambiguity in this case was interpreted against Zurich. Impact This decision will be welcome news to insured parties as it reinforces the need for clarity within insurance policies in order to be effective, should a dispute arise. It is beneficial to know that the Courts are willing to protect insured parties, with potentially ambiguous policies, when they face potential liability. The decision also confirms that an obligation to notify only arises where there is a 50% (or higher) likelihood of a claim being made against the insured party. It will still be prudent to assess all insurance policies in order to determine the exact obligations required for satisfaction, to avoid the policy protection becoming void, should an incident occur. Although a positive step, this decision is by no means a clear cut way to decide whether a duty to notify the insurer has arisen. While being highly desired, but often difficult to achieve, this decision reinforces that clarity is king when it comes to contractual provisions. We have an expert commercial insurance team who are skilled at interpreting contractual provisions in insurance contracts. Please contact paul.eccles@shoosmiths.co.uk for more information. DisclaimerThis document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.]]>{2A8EBFAE-958F-48F2-9EC7-694D3F0A20B7}https://www.shoosmiths.co.uk/client-resources/legal-updates/insurance-act-2015-part-4-insurer-knowledge-11938.aspxInsurance Act 2015 Part 4 - Insurer Knowledge In our previous articles, we have explored the changes to the duty of fair presentation owed by policyholders to insurers under the Insurance Act 2015. FREE DOWNLOAD Our Insurance experts have been closely studying commentary and analysis from leading insurers alike on the challenges, hurdles and benefits to business of what has been billed as the most significant insurance "makeover" in more than a century. To find out more, download our free Business Guide to the new Insurance Act. <!-- .whitepaper --> <!-- .ui-form-note --> Complete the form to start your download. First name Last name Email address Phone number Company If you have any questions, you can review our privacy policy for more information. $(document).ready(function () { if ($('#whitepaperdownloadpanel_WhitepaperPanel').is(":visible")) { $('#WhitepaperDownloadPanel').hide(); } }); $('#DownloadBtn').click(function () { $('#whitepaperdownloadpanel_WhitepaperPanel').show(); $('#WhitepaperDownloadPanel').hide(); }); $('#whitepaperdownloadpanel_WhitepaperFormDownloadButton').click(function () { var pagePosition = $(document).scrollTop(); $('#input_position').val(pagePosition); }); $(document).ready(function () { var pagePosition = ''; $(window).scrollTop(pagePosition); }); $('#whitepaperdownloadpanel_WhitepaperFormDownloadButton').click(function () { $('#whitepaperdownloadpanel_WhitePaperButtonPressed').val('true'); }); <!-- .whitepaper-wrapper --> In this fourth part, Matthew Brown, a solicitor within Shoosmiths' insurance team, takes a closer look at the types of information which fall outside the scope of the revised duty on the basis of insurer knowledge. The duty of fair presentation - a reminder As explained in our previous articles, the duty of fair presentation replaces the old blanket duty on insureds to disclose all material information to underwriters. The main aim of the new duty is to create a more balanced regime for insurers and policyholders. One of the ways in which the Act seeks to reduce the burden placed upon insureds is by widening the scope of the information which insurers are treating as already knowing. Such information does not need to be disclosed by policyholders to achieve a fair presentation of the risk. Insurers - what do they know? Under the new regime, policyholders do not have to disclose information based on insurer knowledge in three situations: If the insurer knows it; If the insurer ought to know it; or If the insurer is presumed to know it. Actual knowledge An insurer is now treated as knowing something if it is known to 'one or more of the individuals who participate on behalf of the insurer in the decision whether to take the risk'. As such, the principal person whose knowledge is relevant is the individual underwriter responsible for writing the risk. However, the Act makes clear that it does not matter whether that person is an employee or an agent of the insurer or writes the risk in any other capacity - the insurer will still be treated as having that person's knowledge. An insurer cannot get around having knowledge by deliberately turning a blind-eye. In those circumstances, the insurer will still be treated as having the knowledge they have sought to avoid. Information an insurer 'ought to know' Insurers are also treated as knowing things the Act says they 'ought to' know, which fall into two categories: Information which ought to have been passed onto the individual(s) writing the risk by another employee or agent of the insurer; and Information held by the insurer which is 'readily available' to the individual(s) writing the risk. It remains to be seen how the courts will interpret these provisions, and in particular which individuals will be seen as having a duty to pass information onto underwriters and how easily accessible information will need to be in order to be treated as 'readily available'. It is not clear, for example, whether underwriters will be expected to have carried out electronic searches of claims files and the like when deciding upon the terms of cover. Information an insurer is 'presumed to know' Insurers are further 'presumed' to know about certain matters. Again, there are two categories of relevant information: Information which is common knowledge; and Information which an insurer offering insurance of that class to insureds in that field would reasonably be expected to know in the ordinary course of business. This closely resembles the position before the Act came into force, although what is not clear from the wording of the Act is to what extent insurers are expected to proactively make enquiries about potentially relevant matters. Conclusion - policyholders should avoid relying upon insurer knowledge At face value, the new regime appears to allocate a slightly broader scope of knowledge to insurers. This should work in policyholders' favour and may give them the opportunity to raise additional arguments where insurers seek to take policy positions based on allegedly unfair presentations of risk. However, there remains a large amount of uncertainty over the proper interpretation of the new provisions, particularly until they receive attention from the courts. As a result, our recommended rule of thumb for policyholders is to work on the basis that the insurer doesn't know anything when presenting the risk. In broad terms, our suggested steps to success are as follows: Liaise with insurers at an early stage to establish an agreed list of what they know and where there are gaps in their knowledge. Make full use of brokers when doing this. Never assume that insurers have any particular knowledge, particularly where more than one set of underwriters are involved in writing multiple risks or where you are changing insurers. As a general rule, if in doubt, disclose. Learn more about the Insurance Act 2015 with our downloadable PDF and articles Part 1 - Duty of Presentation Part 2 - Duty of Presentation Part 3 - Information is King Part 4 - Insurer Knowledge Part 5 (Coming Soon) Part 6 (Coming Soon) Insurance Act 2015 Overview DisclaimerThis document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.Wed, 05 Oct 2016 00:00:00 +0100<![CDATA[Richard Marshall Matthew Brown ]]><![CDATA[ In our previous articles, we have explored the changes to the duty of fair presentation owed by policyholders to insurers under the Insurance Act 2015. FREE DOWNLOAD Our Insurance experts have been closely studying commentary and analysis from leading insurers alike on the challenges, hurdles and benefits to business of what has been billed as the most significant insurance "makeover" in more than a century. To find out more, download our free Business Guide to the new Insurance Act. <!-- .whitepaper --> <!-- .ui-form-note --> Complete the form to start your download. First name Last name Email address Phone number Company If you have any questions, you can review our privacy policy for more information. $(document).ready(function () { if ($('#whitepaperdownloadpanel_WhitepaperPanel').is(":visible")) { $('#WhitepaperDownloadPanel').hide(); } }); $('#DownloadBtn').click(function () { $('#whitepaperdownloadpanel_WhitepaperPanel').show(); $('#WhitepaperDownloadPanel').hide(); }); $('#whitepaperdownloadpanel_WhitepaperFormDownloadButton').click(function () { var pagePosition = $(document).scrollTop(); $('#input_position').val(pagePosition); }); $(document).ready(function () { var pagePosition = ''; $(window).scrollTop(pagePosition); }); $('#whitepaperdownloadpanel_WhitepaperFormDownloadButton').click(function () { $('#whitepaperdownloadpanel_WhitePaperButtonPressed').val('true'); }); <!-- .whitepaper-wrapper --> In this fourth part, Matthew Brown, a solicitor within Shoosmiths' insurance team, takes a closer look at the types of information which fall outside the scope of the revised duty on the basis of insurer knowledge. The duty of fair presentation - a reminder As explained in our previous articles, the duty of fair presentation replaces the old blanket duty on insureds to disclose all material information to underwriters. The main aim of the new duty is to create a more balanced regime for insurers and policyholders. One of the ways in which the Act seeks to reduce the burden placed upon insureds is by widening the scope of the information which insurers are treating as already knowing. Such information does not need to be disclosed by policyholders to achieve a fair presentation of the risk. Insurers - what do they know? Under the new regime, policyholders do not have to disclose information based on insurer knowledge in three situations: If the insurer knows it; If the insurer ought to know it; or If the insurer is presumed to know it. Actual knowledge An insurer is now treated as knowing something if it is known to 'one or more of the individuals who participate on behalf of the insurer in the decision whether to take the risk'. As such, the principal person whose knowledge is relevant is the individual underwriter responsible for writing the risk. However, the Act makes clear that it does not matter whether that person is an employee or an agent of the insurer or writes the risk in any other capacity - the insurer will still be treated as having that person's knowledge. An insurer cannot get around having knowledge by deliberately turning a blind-eye. In those circumstances, the insurer will still be treated as having the knowledge they have sought to avoid. Information an insurer 'ought to know' Insurers are also treated as knowing things the Act says they 'ought to' know, which fall into two categories: Information which ought to have been passed onto the individual(s) writing the risk by another employee or agent of the insurer; and Information held by the insurer which is 'readily available' to the individual(s) writing the risk. It remains to be seen how the courts will interpret these provisions, and in particular which individuals will be seen as having a duty to pass information onto underwriters and how easily accessible information will need to be in order to be treated as 'readily available'. It is not clear, for example, whether underwriters will be expected to have carried out electronic searches of claims files and the like when deciding upon the terms of cover. Information an insurer is 'presumed to know' Insurers are further 'presumed' to know about certain matters. Again, there are two categories of relevant information: Information which is common knowledge; and Information which an insurer offering insurance of that class to insureds in that field would reasonably be expected to know in the ordinary course of business. This closely resembles the position before the Act came into force, although what is not clear from the wording of the Act is to what extent insurers are expected to proactively make enquiries about potentially relevant matters. Conclusion - policyholders should avoid relying upon insurer knowledge At face value, the new regime appears to allocate a slightly broader scope of knowledge to insurers. This should work in policyholders' favour and may give them the opportunity to raise additional arguments where insurers seek to take policy positions based on allegedly unfair presentations of risk. However, there remains a large amount of uncertainty over the proper interpretation of the new provisions, particularly until they receive attention from the courts. As a result, our recommended rule of thumb for policyholders is to work on the basis that the insurer doesn't know anything when presenting the risk. In broad terms, our suggested steps to success are as follows: Liaise with insurers at an early stage to establish an agreed list of what they know and where there are gaps in their knowledge. Make full use of brokers when doing this. Never assume that insurers have any particular knowledge, particularly where more than one set of underwriters are involved in writing multiple risks or where you are changing insurers. As a general rule, if in doubt, disclose. Learn more about the Insurance Act 2015 with our downloadable PDF and articles Part 1 - Duty of Presentation Part 2 - Duty of Presentation Part 3 - Information is King Part 4 - Insurer Knowledge Part 5 (Coming Soon) Part 6 (Coming Soon) Insurance Act 2015 Overview DisclaimerThis document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.]]>{B987747C-04F6-43F2-9A5F-9EB919360482}https://www.shoosmiths.co.uk/client-resources/legal-updates/insurance-act-2015-part-3-information-is-king-11777.aspxInsurance Act 2015 Part 3 - Information is King In our previous articles, we have explored the changes to the duty of fair presentation owed by policyholders to insurers under the Insurance Act 2015. FREE DOWNLOAD Our Insurance experts have been closely studying commentary and analysis from leading insurers alike on the challenges, hurdles and benefits to business of what has been billed as the most significant insurance "makeover" in more than a century. To find out more, download our free Business Guide to the new Insurance Act. <!-- .whitepaper --> <!-- .ui-form-note --> Complete the form to start your download. First name Last name Email address Phone number Company If you have any questions, you can review our privacy policy for more information. $(document).ready(function () { if ($('#whitepaperdownloadpanel_WhitepaperPanel').is(":visible")) { $('#WhitepaperDownloadPanel').hide(); } }); $('#DownloadBtn').click(function () { $('#whitepaperdownloadpanel_WhitepaperPanel').show(); $('#WhitepaperDownloadPanel').hide(); }); $('#whitepaperdownloadpanel_WhitepaperFormDownloadButton').click(function () { var pagePosition = $(document).scrollTop(); $('#input_position').val(pagePosition); }); $(document).ready(function () { var pagePosition = ''; $(window).scrollTop(pagePosition); }); $('#whitepaperdownloadpanel_WhitepaperFormDownloadButton').click(function () { $('#whitepaperdownloadpanel_WhitePaperButtonPressed').val('true'); }); <!-- .whitepaper-wrapper --> In this third part, Matthew Brown, a solicitor within Shoosmiths' insurance team, takes a closer look at the new requirement for policyholders to present information in a way which is "clear and accessible" for insurers. The duty of fair presentation - a reminder The duty of fair presentation replaces the old blanket duty on insureds to disclose all material information to underwriters. The main aim of the new duty is to remove some of the unfairness of the old regime for policyholders. Insureds used to have to try to work out themselves what information might be relevant to the insurer, which was not always an easy task. Under the new system, it is enough for an insured to give the insurer sufficient information to put them on notice that they need to ask further questions. This provides insureds with a certain amount of leeway and there is now more of an emphasis on insurers having to ask relevant questions, so that policyholders are pointed in the direction of what they need to provide. However, whilst the Act is undoubtedly insured-friendly in many respects, it also aims to create a fairer and more balanced regime for insurers. Policyholders therefore need to be aware of the new duties they now face, which represent potential traps for the unwary. No more 'data dumping' A side effect of the old requirement on insureds to disclose all material information was that they would often provide a large volume of data to insurers, much of which was not relevant, to make sure that they did not inadvertently overlook material information. This practice became known as 'data-dumping' and created a significant headache for insurers. Underwriters were often required to commit vast resources to sifting through documents to identify the information they needed. Information-dumping of this kind has now been outlawed by the Act, which requires insureds to make disclosure: 'in a manner which would be reasonably clear and accessible to a prudent insurer'. This duty applies whether disclosure is made online or on paper. Policyholders are likely to fall foul of this requirement not only if they provide submissions which are too short and cryptic, but also where submissions are overly large and messy. Policyholders therefore need to put systems in place quickly to ensure that they get this balance right and avoid arguments that they have failed to make a fair presentation of the risk. It is important to remember that disclosing a large volume of data is not always the same as data dumping. There will be situations where lengthy submissions are required. But what policyholders now need to ensure is that their submissions, however voluminous, are relevant and most importantly of all presented in a digestible format. 'Clear and accessible' disclosure - steps to success The Act is designed to cover the full range of commercial insurance and so it is no surprise that it does not provide any guidance as to what constitutes reasonably clear and accessible disclosure. Clearly, what constitutes a clear and accessible presentation of the risk will be very different for a small business compared to a large multinational and each case is likely to turn on its own facts. It will be interesting to see whether the courts step in to provide any guiding principles to help policyholders navigate the new requirements. In general terms, however, we would recommend the following steps to success: Engage with insurers at an early stage. It may sound obvious, but the best guide to what an insurer will consider clear and accessible is the insurer itself. Insurers may require information to be presented in a certain way, so it makes sense to ask what they are looking for at the outset. It may take time to make changes to existing processes so this should happen as early on as possible. Avoid the 'regurgitation' trap. The duty of fair presentation arises at each policy renewal so it is very important to check that information is updated, particularly now that the rules on disclosure have changed. Consider treating your next policy renewal as a 'fresh start' in terms of disclosure and make sure that submissions are actively audited against the requirements of the Act. Signpost and structure your submissions as much as possible. Whether the submission is to be made online or on paper, it needs to be user-friendly and easy to navigate. Contents lists and indexing will be important and electronic files should be well organised and easy to search and download. Your broker should be able to assist you with this. Use exception reporting. Make sure that the relevance of the information you are providing is made clear, particularly where there are issues which are out of the ordinary or specific to your business. It is important to highlight any particular concerns or known risks which led you to take out the cover in the first place. Avoid playing down aspects of the risk which you think insurers might not like. Manage changes carefully. It is important to record any changes to a submission in a way which is easy for insurers to follow. Make sure that you retain the original data as well so that there is a clear and visible audit trail. Overall, the Act's introduction of a requirement on policyholders to ensure the quality, as well as the completeness, of their disclosure submissions marks a real step-change in insurance law. Insureds would be well advised to start taking steps now to make sure they are in a good position to keep in line with the new regime. Learn more about the Insurance Act 2015 with our downloadable PDF and articles Part 1 - Duty of Presentation Part 2 - Duty of Presentation Part 3 - Information is King Part 4 - Insurer Knowledge Part 5 (Coming Soon) Part 6 (Coming Soon) Insurance Act 2015 Overview DisclaimerThis document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.Fri, 26 Aug 2016 00:00:00 +0100<![CDATA[Paul Eccles Matthew Brown ]]><![CDATA[ In our previous articles, we have explored the changes to the duty of fair presentation owed by policyholders to insurers under the Insurance Act 2015. FREE DOWNLOAD Our Insurance experts have been closely studying commentary and analysis from leading insurers alike on the challenges, hurdles and benefits to business of what has been billed as the most significant insurance "makeover" in more than a century. To find out more, download our free Business Guide to the new Insurance Act. <!-- .whitepaper --> <!-- .ui-form-note --> Complete the form to start your download. First name Last name Email address Phone number Company If you have any questions, you can review our privacy policy for more information. $(document).ready(function () { if ($('#whitepaperdownloadpanel_WhitepaperPanel').is(":visible")) { $('#WhitepaperDownloadPanel').hide(); } }); $('#DownloadBtn').click(function () { $('#whitepaperdownloadpanel_WhitepaperPanel').show(); $('#WhitepaperDownloadPanel').hide(); }); $('#whitepaperdownloadpanel_WhitepaperFormDownloadButton').click(function () { var pagePosition = $(document).scrollTop(); $('#input_position').val(pagePosition); }); $(document).ready(function () { var pagePosition = ''; $(window).scrollTop(pagePosition); }); $('#whitepaperdownloadpanel_WhitepaperFormDownloadButton').click(function () { $('#whitepaperdownloadpanel_WhitePaperButtonPressed').val('true'); }); <!-- .whitepaper-wrapper --> In this third part, Matthew Brown, a solicitor within Shoosmiths' insurance team, takes a closer look at the new requirement for policyholders to present information in a way which is "clear and accessible" for insurers. The duty of fair presentation - a reminder The duty of fair presentation replaces the old blanket duty on insureds to disclose all material information to underwriters. The main aim of the new duty is to remove some of the unfairness of the old regime for policyholders. Insureds used to have to try to work out themselves what information might be relevant to the insurer, which was not always an easy task. Under the new system, it is enough for an insured to give the insurer sufficient information to put them on notice that they need to ask further questions. This provides insureds with a certain amount of leeway and there is now more of an emphasis on insurers having to ask relevant questions, so that policyholders are pointed in the direction of what they need to provide. However, whilst the Act is undoubtedly insured-friendly in many respects, it also aims to create a fairer and more balanced regime for insurers. Policyholders therefore need to be aware of the new duties they now face, which represent potential traps for the unwary. No more 'data dumping' A side effect of the old requirement on insureds to disclose all material information was that they would often provide a large volume of data to insurers, much of which was not relevant, to make sure that they did not inadvertently overlook material information. This practice became known as 'data-dumping' and created a significant headache for insurers. Underwriters were often required to commit vast resources to sifting through documents to identify the information they needed. Information-dumping of this kind has now been outlawed by the Act, which requires insureds to make disclosure: 'in a manner which would be reasonably clear and accessible to a prudent insurer'. This duty applies whether disclosure is made online or on paper. Policyholders are likely to fall foul of this requirement not only if they provide submissions which are too short and cryptic, but also where submissions are overly large and messy. Policyholders therefore need to put systems in place quickly to ensure that they get this balance right and avoid arguments that they have failed to make a fair presentation of the risk. It is important to remember that disclosing a large volume of data is not always the same as data dumping. There will be situations where lengthy submissions are required. But what policyholders now need to ensure is that their submissions, however voluminous, are relevant and most importantly of all presented in a digestible format. 'Clear and accessible' disclosure - steps to success The Act is designed to cover the full range of commercial insurance and so it is no surprise that it does not provide any guidance as to what constitutes reasonably clear and accessible disclosure. Clearly, what constitutes a clear and accessible presentation of the risk will be very different for a small business compared to a large multinational and each case is likely to turn on its own facts. It will be interesting to see whether the courts step in to provide any guiding principles to help policyholders navigate the new requirements. In general terms, however, we would recommend the following steps to success: Engage with insurers at an early stage. It may sound obvious, but the best guide to what an insurer will consider clear and accessible is the insurer itself. Insurers may require information to be presented in a certain way, so it makes sense to ask what they are looking for at the outset. It may take time to make changes to existing processes so this should happen as early on as possible. Avoid the 'regurgitation' trap. The duty of fair presentation arises at each policy renewal so it is very important to check that information is updated, particularly now that the rules on disclosure have changed. Consider treating your next policy renewal as a 'fresh start' in terms of disclosure and make sure that submissions are actively audited against the requirements of the Act. Signpost and structure your submissions as much as possible. Whether the submission is to be made online or on paper, it needs to be user-friendly and easy to navigate. Contents lists and indexing will be important and electronic files should be well organised and easy to search and download. Your broker should be able to assist you with this. Use exception reporting. Make sure that the relevance of the information you are providing is made clear, particularly where there are issues which are out of the ordinary or specific to your business. It is important to highlight any particular concerns or known risks which led you to take out the cover in the first place. Avoid playing down aspects of the risk which you think insurers might not like. Manage changes carefully. It is important to record any changes to a submission in a way which is easy for insurers to follow. Make sure that you retain the original data as well so that there is a clear and visible audit trail. Overall, the Act's introduction of a requirement on policyholders to ensure the quality, as well as the completeness, of their disclosure submissions marks a real step-change in insurance law. Insureds would be well advised to start taking steps now to make sure they are in a good position to keep in line with the new regime. Learn more about the Insurance Act 2015 with our downloadable PDF and articles Part 1 - Duty of Presentation Part 2 - Duty of Presentation Part 3 - Information is King Part 4 - Insurer Knowledge Part 5 (Coming Soon) Part 6 (Coming Soon) Insurance Act 2015 Overview DisclaimerThis document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.]]>{C527663D-3173-4C60-81C1-C1DB8287B911}https://www.shoosmiths.co.uk/client-resources/legal-updates/insurance-act-2015-part-2-duty-of-presentation-11667.aspxBusiness Guide to the Insurance Act 2015 Part 2 - Duty of Presentation In our last article, we introduced the aims and objectives of the Insurance Act 2015's general changes to the 'Duty of Fair Presentation'. FREE DOWNLOAD Our Insurance experts have been closely studying commentary and analysis from leading insurers alike on the challenges, hurdles and benefits to business of what has been billed as the most significant insurance "makeover" in more than a century. To find out more, download our free Business Guide to the new Insurance Act. <!-- .whitepaper --> <!-- .ui-form-note --> Complete the form to start your download. First name Last name Email address Phone number Company If you have any questions, you can review our privacy policy for more information. $(document).ready(function () { if ($('#whitepaperdownloadpanel_WhitepaperPanel').is(":visible")) { $('#WhitepaperDownloadPanel').hide(); } }); $('#DownloadBtn').click(function () { $('#whitepaperdownloadpanel_WhitepaperPanel').show(); $('#WhitepaperDownloadPanel').hide(); }); $('#whitepaperdownloadpanel_WhitepaperFormDownloadButton').click(function () { var pagePosition = $(document).scrollTop(); $('#input_position').val(pagePosition); }); $(document).ready(function () { var pagePosition = ''; $(window).scrollTop(pagePosition); }); $('#whitepaperdownloadpanel_WhitepaperFormDownloadButton').click(function () { $('#whitepaperdownloadpanel_WhitePaperButtonPressed').val('true'); }); <!-- .whitepaper-wrapper --> In this second part, Richard Marshall, senior associate within Shoosmiths' insurance team, takes a closer look at the impact of the new duty on insureds. A new duty The Duty of Fair Presentation replaces an insured's blanket duty to disclose all material information to underwriters. Up until now, the law has required insureds to crystal ball gaze as to what may be material to an underwriter. The harshness of the outgoing default regime is obvious: how can a lay insured with no knowledge of insurance underwriting really second guess what is material? The consequence of 'getting it wrong' has been severe - insurers' remedy has been to void the policy as if it did not exist. Needless to say, the new Duty of Fair Presentation which both (a) removes some of the guesswork as to what an underwriter would consider material; and (b) provides for less onerous consequences for non-disclosure / misrepresentation is to be welcomed. What is the Duty of Fair Presentation? The Act is prescriptive as to what amounts to a Fair Presentation. The duty is as follows: (a) to disclose to the insurer every material circumstance which the business knows or ought to know about; or (b) at the very least, to give the insurer sufficient information to put a prudent insurer on notice that further enquiries are needed by them to reveal those material circumstances. It is the second limb which removes the guesswork on the insured as to what information the underwriter would actually need, although it is worth noting that the insured is still required to provide enough information to alert the insurer about potentially relevant matters before the onus shifts to the insurer to tell the insured what further information it wants. Additionally, any material representations as to matters of fact must be substantially correct and material representations as to matters of expectation or belief must be made in good faith. The meaning of 'material' is unchanged. Broadly, information is 'material' if it would influence a prudent underwriter when making a decision to underwrite the insurance policy, and if so, on what terms. Knowledge &amp; the reasonable search. The requirement to disclose information which the business knows or ought to know dovetails with a need to undertake a reasonable search for information. In a nutshell, the overarching principle is to ensure that insureds undertake a diligent search for information at all appropriate levels of a business. The parameters of what constitutes a reasonable search goes hand in hand with an understanding of whose knowledge matters within the insured. The Act is prescriptive about who these people are: senior management (described as those individuals who play significant roles in the making of decisions about how the insured's activities are to be managed or organised), those with insurance responsibilities (e.g. individuals procuring insurance policies or collating information about risk. NB such employees could be junior). This category also encapsulates agents, for example, an insured's broker. Benefit In theory, there should be fewer denials of policy coverage from insurers. However, it would be dangerous to view the Duty of Fair Presentation as a panacea to all disclosure related concerns. For example, the format and quality of the presentation now assumes heightened relevance. Side stepping obligations by 'data dumping' has now been expressly prohibited. In other words, there is a requirement for insured and broker to think through the relevance of the presentation made - this 'subjective' exercise carries obvious peril for remiss / stretched organisations. Failure to make a Fair Presentation Deliberate or reckless failure to make a Fair Presentation will still give insurers the right to avoid a policy. Otherwise, insurer's remedy will now be commensurate to the position the insurer would have been in 'but for' the failure to give a Fair Presentation. Here, the onus will be on an insurer to assert what it would have done differently (for example, changing the terms or the policy or charging a higher premium or even, in extreme cases, refusing cover altogether). Where an insurer can establish it would have acted differently, it will be able to reduce the policy indemnity available accordingly. Fair Presentation: steps to success Formulate a written plan as to how the business will coordinate disclosure exercises at policy inceptions / renewals. The document should identify specific roles / members of personnel who shall be relevant to that exercise. Consider seeking feedback on your disclosure plan from your broker. Plan ahead - it sounds obvious, but last minute searches risk internal deference / corner cutting. Ensure searches occur in a timely manner. Ensure the presentation of information is well structured and digestible for a prudent insurer. If you are unsure whether data is relevant or not, speak to your broker / insurer directly. Ensure that critical data is not obscured by documentation / information added "for completeness". Make sure every representation made is substantially correct and statements of expectation or belief are made in good faith. As a broad rule of thumb, place yourself in the shoes of the insurer - would you feel misled by what is being represented Overall, whilst the Duty of Fair Presentation is no doubt good news for insureds, the positive requirements to ensure relevance and presentational quality arguably create new perils. This heightens the need for insureds to engage high quality, proactive brokers. Learn more about the Insurance Act 2015 with our downloadable PDF and articles Part 1 - Duty of Presentation Part 2 - Duty of Presentation Part 3 - Information is King Part 4 - Insurer Knowledge Part 5 (Coming Soon) Part 6 (Coming Soon) Insurance Act 2015 Overview DisclaimerThis document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.Thu, 11 Aug 2016 00:00:00 +0100<![CDATA[Paul Eccles Richard Marshall ]]><![CDATA[ In our last article, we introduced the aims and objectives of the Insurance Act 2015's general changes to the 'Duty of Fair Presentation'. FREE DOWNLOAD Our Insurance experts have been closely studying commentary and analysis from leading insurers alike on the challenges, hurdles and benefits to business of what has been billed as the most significant insurance "makeover" in more than a century. To find out more, download our free Business Guide to the new Insurance Act. <!-- .whitepaper --> <!-- .ui-form-note --> Complete the form to start your download. First name Last name Email address Phone number Company If you have any questions, you can review our privacy policy for more information. $(document).ready(function () { if ($('#whitepaperdownloadpanel_WhitepaperPanel').is(":visible")) { $('#WhitepaperDownloadPanel').hide(); } }); $('#DownloadBtn').click(function () { $('#whitepaperdownloadpanel_WhitepaperPanel').show(); $('#WhitepaperDownloadPanel').hide(); }); $('#whitepaperdownloadpanel_WhitepaperFormDownloadButton').click(function () { var pagePosition = $(document).scrollTop(); $('#input_position').val(pagePosition); }); $(document).ready(function () { var pagePosition = ''; $(window).scrollTop(pagePosition); }); $('#whitepaperdownloadpanel_WhitepaperFormDownloadButton').click(function () { $('#whitepaperdownloadpanel_WhitePaperButtonPressed').val('true'); }); <!-- .whitepaper-wrapper --> In this second part, Richard Marshall, senior associate within Shoosmiths' insurance team, takes a closer look at the impact of the new duty on insureds. A new duty The Duty of Fair Presentation replaces an insured's blanket duty to disclose all material information to underwriters. Up until now, the law has required insureds to crystal ball gaze as to what may be material to an underwriter. The harshness of the outgoing default regime is obvious: how can a lay insured with no knowledge of insurance underwriting really second guess what is material? The consequence of 'getting it wrong' has been severe - insurers' remedy has been to void the policy as if it did not exist. Needless to say, the new Duty of Fair Presentation which both (a) removes some of the guesswork as to what an underwriter would consider material; and (b) provides for less onerous consequences for non-disclosure / misrepresentation is to be welcomed. What is the Duty of Fair Presentation? The Act is prescriptive as to what amounts to a Fair Presentation. The duty is as follows: (a) to disclose to the insurer every material circumstance which the business knows or ought to know about; or (b) at the very least, to give the insurer sufficient information to put a prudent insurer on notice that further enquiries are needed by them to reveal those material circumstances. It is the second limb which removes the guesswork on the insured as to what information the underwriter would actually need, although it is worth noting that the insured is still required to provide enough information to alert the insurer about potentially relevant matters before the onus shifts to the insurer to tell the insured what further information it wants. Additionally, any material representations as to matters of fact must be substantially correct and material representations as to matters of expectation or belief must be made in good faith. The meaning of 'material' is unchanged. Broadly, information is 'material' if it would influence a prudent underwriter when making a decision to underwrite the insurance policy, and if so, on what terms. Knowledge &amp; the reasonable search. The requirement to disclose information which the business knows or ought to know dovetails with a need to undertake a reasonable search for information. In a nutshell, the overarching principle is to ensure that insureds undertake a diligent search for information at all appropriate levels of a business. The parameters of what constitutes a reasonable search goes hand in hand with an understanding of whose knowledge matters within the insured. The Act is prescriptive about who these people are: senior management (described as those individuals who play significant roles in the making of decisions about how the insured's activities are to be managed or organised), those with insurance responsibilities (e.g. individuals procuring insurance policies or collating information about risk. NB such employees could be junior). This category also encapsulates agents, for example, an insured's broker. Benefit In theory, there should be fewer denials of policy coverage from insurers. However, it would be dangerous to view the Duty of Fair Presentation as a panacea to all disclosure related concerns. For example, the format and quality of the presentation now assumes heightened relevance. Side stepping obligations by 'data dumping' has now been expressly prohibited. In other words, there is a requirement for insured and broker to think through the relevance of the presentation made - this 'subjective' exercise carries obvious peril for remiss / stretched organisations. Failure to make a Fair Presentation Deliberate or reckless failure to make a Fair Presentation will still give insurers the right to avoid a policy. Otherwise, insurer's remedy will now be commensurate to the position the insurer would have been in 'but for' the failure to give a Fair Presentation. Here, the onus will be on an insurer to assert what it would have done differently (for example, changing the terms or the policy or charging a higher premium or even, in extreme cases, refusing cover altogether). Where an insurer can establish it would have acted differently, it will be able to reduce the policy indemnity available accordingly. Fair Presentation: steps to success Formulate a written plan as to how the business will coordinate disclosure exercises at policy inceptions / renewals. The document should identify specific roles / members of personnel who shall be relevant to that exercise. Consider seeking feedback on your disclosure plan from your broker. Plan ahead - it sounds obvious, but last minute searches risk internal deference / corner cutting. Ensure searches occur in a timely manner. Ensure the presentation of information is well structured and digestible for a prudent insurer. If you are unsure whether data is relevant or not, speak to your broker / insurer directly. Ensure that critical data is not obscured by documentation / information added "for completeness". Make sure every representation made is substantially correct and statements of expectation or belief are made in good faith. As a broad rule of thumb, place yourself in the shoes of the insurer - would you feel misled by what is being represented Overall, whilst the Duty of Fair Presentation is no doubt good news for insureds, the positive requirements to ensure relevance and presentational quality arguably create new perils. This heightens the need for insureds to engage high quality, proactive brokers. Learn more about the Insurance Act 2015 with our downloadable PDF and articles Part 1 - Duty of Presentation Part 2 - Duty of Presentation Part 3 - Information is King Part 4 - Insurer Knowledge Part 5 (Coming Soon) Part 6 (Coming Soon) Insurance Act 2015 Overview DisclaimerThis document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.]]>{0EDAC15F-0E5B-476D-9761-E07591E0CF9A}https://www.shoosmiths.co.uk/client-resources/legal-updates/part-1-duty-of-presentation-11529.aspxBusiness Guide to the Insurance Act 2015 Part 1 - Duty of Presentation Following on from Shoosmiths' published Business Guide to the Insurance Act 2015, we will now examine in more detail, from a policyholder's perspective, what policyholder challenges are in the coming months. FREE DOWNLOAD Our Insurance experts have been closely studying commentary and analysis from leading insurers alike on the challenges, hurdles and benefits to business of what has been billed as the most significant insurance "makeover" in more than a century. To find out more, download our free Business Guide to the new Insurance Act. <!-- .whitepaper --> <!-- .ui-form-note --> Complete the form to start your download. First name Last name Email address Phone number Company If you have any questions, you can review our privacy policy for more information. $(document).ready(function () { if ($('#whitepaperdownloadpanel_WhitepaperPanel').is(":visible")) { $('#WhitepaperDownloadPanel').hide(); } }); $('#DownloadBtn').click(function () { $('#whitepaperdownloadpanel_WhitepaperPanel').show(); $('#WhitepaperDownloadPanel').hide(); }); $('#whitepaperdownloadpanel_WhitepaperFormDownloadButton').click(function () { var pagePosition = $(document).scrollTop(); $('#input_position').val(pagePosition); }); $(document).ready(function () { var pagePosition = ''; $(window).scrollTop(pagePosition); }); $('#whitepaperdownloadpanel_WhitepaperFormDownloadButton').click(function () { $('#whitepaperdownloadpanel_WhitePaperButtonPressed').val('true'); }); <!-- .whitepaper-wrapper --> Gathering and Assimilating Knowledge Within the Business - Senior Management Following on from Shoosmiths' published Business Guide to the Insurance Act 2015, we will now examine in more detail, from a policyholder's perspective, what policyholder challenges are in the coming months. The Duty - A Reminder The Insurance Act 2015, places a duty on policyholders that they must disclose all material information known by the business, but in particular, senior management. The Act sets out a more structured framework for the information that a policyholder absolutely must provide to an insurance company before it enters into or renews a contract of insurance. As we noted in the Business Guide, even a variation or amendment to an existing insurance policy will trigger the duty of fair presentation. In a nutshell, you need to understand what information needs to be disclosed, who within the business holds that information and how you are going to capture it. Gathering and Assimilating Information to be Disclosed There are certain individuals whose knowledge of the business for the purposes of disclosure and complying with the duty of fair presentation will be key. These include senior management, risk managers responsible for the company's insurance, both inside and outside the organisation, subsidiaries in a group of companies and, of course, your insurance brokers. This is not an exhaustive list as it is entirely possible that more specific information will be required by insurers depending on the nature of the business. In practice, your broker will advise on your disclosure obligations and there will be far more emphasis on the content of your proposal or "the form of presentation" of information and who you will need to obtain information from both within and outside the business. Do bear in mind that the whole point of the new legislation is to create a fairer playing field, but the age old principle that insurers "need to be told" does not really go away. If anything, the provision of accurate and relevant (or material) information will be a key hurdle for policyholders when purchasing insurance cover. In practice, we would expect that instead of leaving everything to your insurance managers, all relevant personnel should come together and collaborate on the search for and provision of relevant information. In this part, we confine ourselves to looking at the role of senior managers or senior personnel within the business. The Challenges It is likely that in larger organisations, senior management could include a large number of individuals. It may include a number of different companies e.g. subsidiaries. It may include personnel in different jurisdictions. Great care should, therefore, be taken in conjunction with your brokers to try to agree a specific brief and group of senior management "knowledge holders". Indeed engaging with the insurers on this subject will be a priority. We advocate taking great care in putting this group of people together. Senior management in this context will include group insurance managers, risk managers and it may also include members of the Board. Our experience is that it is sometimes a struggle for insurance managers to raise the profile of insurance on a Board agenda. You can no longer afford such an approach to insurance. Beware policy renewal! As explained in our earlier guide, the Insurance Act 2015 not only applies to new policies but also those falling due for renewal after 12 August 2016 (unless the policy disapplies the 2015 Act). In a nutshell, this is because the law treats an insurance renewal as a new, standalone "contract". This is a commonly misunderstood point. It is our experience that in a busy commercial world, renewals represent real risk of misrepresentation/non-disclosure by temptation for businesses/brokers to simply regurgitate information disclosed to insurers in the previous year. The risk of regurgitation is amplified in the circumstances where the rules of disclosure will change. We strongly recommend that renewals post 12 August 2015 are actively audited against the new Act's requirements. The Road to Success There is no doubt as we set out in our Business Guide, that policyholders who get this right will enjoy much greater benefit that the Act provides. However, the new regime can also pose risk for the unwary. Your starting point on the road to getting this right is:- Start now - do not wait until shortly before renewal. Selecting and assimilating information, particularly where you have overseas branches and a greater number of senior management whose input is required, will take far longer than if you are a smaller organisation. Look closely at the structure of your business i.e. the corporate structure and appoint/identify your senior management team. Raise awareness within the business. We have looked at the challenge some insurance group managers have in escalating the subject of insurance to the Board, but you can demonstrate the value of insurance by highlighting historic losses and costs to the business. In conjunction with your broker, prepare detailed notes outlining all the information required. This is the area you will require most input on from your broker. You must rely on your brokers here and do not be tempted to place your own interpretation on your broker's guidance. Try to agree via your broker and with insurers which senior management personnel and areas they want information about. Better negotiation by your broker of contract wording will assist. Seek legal input where appropriate. Be aware of changes in personnel and any challenges about the lack of knowledge that may be a consequence of that. Ensure as a business that insurance is given far greater priority than it has been historically as the benefits of such an approach, in our view, are obvious. In Part 2 we will look at what sort of "knowledge" and information insurers will require at carrying out reasonable searches for information and the practicalities of what that entails. Learn more about the Insurance Act 2015 with our downloadable PDF and articles Part 1 - Duty of Presentation Part 2 - Duty of Presentation Part 3 - Information is King Part 4 - Insurer Knowledge Part 5 (Coming Soon) Part 6 (Coming Soon) Insurance Act 2015 Overview DisclaimerThis document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.Fri, 08 Jul 2016 00:00:00 +0100<![CDATA[Paul Eccles Richard Marshall ]]><![CDATA[ Following on from Shoosmiths' published Business Guide to the Insurance Act 2015, we will now examine in more detail, from a policyholder's perspective, what policyholder challenges are in the coming months. FREE DOWNLOAD Our Insurance experts have been closely studying commentary and analysis from leading insurers alike on the challenges, hurdles and benefits to business of what has been billed as the most significant insurance "makeover" in more than a century. To find out more, download our free Business Guide to the new Insurance Act. <!-- .whitepaper --> <!-- .ui-form-note --> Complete the form to start your download. First name Last name Email address Phone number Company If you have any questions, you can review our privacy policy for more information. $(document).ready(function () { if ($('#whitepaperdownloadpanel_WhitepaperPanel').is(":visible")) { $('#WhitepaperDownloadPanel').hide(); } }); $('#DownloadBtn').click(function () { $('#whitepaperdownloadpanel_WhitepaperPanel').show(); $('#WhitepaperDownloadPanel').hide(); }); $('#whitepaperdownloadpanel_WhitepaperFormDownloadButton').click(function () { var pagePosition = $(document).scrollTop(); $('#input_position').val(pagePosition); }); $(document).ready(function () { var pagePosition = ''; $(window).scrollTop(pagePosition); }); $('#whitepaperdownloadpanel_WhitepaperFormDownloadButton').click(function () { $('#whitepaperdownloadpanel_WhitePaperButtonPressed').val('true'); }); <!-- .whitepaper-wrapper --> Gathering and Assimilating Knowledge Within the Business - Senior Management Following on from Shoosmiths' published Business Guide to the Insurance Act 2015, we will now examine in more detail, from a policyholder's perspective, what policyholder challenges are in the coming months. The Duty - A Reminder The Insurance Act 2015, places a duty on policyholders that they must disclose all material information known by the business, but in particular, senior management. The Act sets out a more structured framework for the information that a policyholder absolutely must provide to an insurance company before it enters into or renews a contract of insurance. As we noted in the Business Guide, even a variation or amendment to an existing insurance policy will trigger the duty of fair presentation. In a nutshell, you need to understand what information needs to be disclosed, who within the business holds that information and how you are going to capture it. Gathering and Assimilating Information to be Disclosed There are certain individuals whose knowledge of the business for the purposes of disclosure and complying with the duty of fair presentation will be key. These include senior management, risk managers responsible for the company's insurance, both inside and outside the organisation, subsidiaries in a group of companies and, of course, your insurance brokers. This is not an exhaustive list as it is entirely possible that more specific information will be required by insurers depending on the nature of the business. In practice, your broker will advise on your disclosure obligations and there will be far more emphasis on the content of your proposal or "the form of presentation" of information and who you will need to obtain information from both within and outside the business. Do bear in mind that the whole point of the new legislation is to create a fairer playing field, but the age old principle that insurers "need to be told" does not really go away. If anything, the provision of accurate and relevant (or material) information will be a key hurdle for policyholders when purchasing insurance cover. In practice, we would expect that instead of leaving everything to your insurance managers, all relevant personnel should come together and collaborate on the search for and provision of relevant information. In this part, we confine ourselves to looking at the role of senior managers or senior personnel within the business. The Challenges It is likely that in larger organisations, senior management could include a large number of individuals. It may include a number of different companies e.g. subsidiaries. It may include personnel in different jurisdictions. Great care should, therefore, be taken in conjunction with your brokers to try to agree a specific brief and group of senior management "knowledge holders". Indeed engaging with the insurers on this subject will be a priority. We advocate taking great care in putting this group of people together. Senior management in this context will include group insurance managers, risk managers and it may also include members of the Board. Our experience is that it is sometimes a struggle for insurance managers to raise the profile of insurance on a Board agenda. You can no longer afford such an approach to insurance. Beware policy renewal! As explained in our earlier guide, the Insurance Act 2015 not only applies to new policies but also those falling due for renewal after 12 August 2016 (unless the policy disapplies the 2015 Act). In a nutshell, this is because the law treats an insurance renewal as a new, standalone "contract". This is a commonly misunderstood point. It is our experience that in a busy commercial world, renewals represent real risk of misrepresentation/non-disclosure by temptation for businesses/brokers to simply regurgitate information disclosed to insurers in the previous year. The risk of regurgitation is amplified in the circumstances where the rules of disclosure will change. We strongly recommend that renewals post 12 August 2015 are actively audited against the new Act's requirements. The Road to Success There is no doubt as we set out in our Business Guide, that policyholders who get this right will enjoy much greater benefit that the Act provides. However, the new regime can also pose risk for the unwary. Your starting point on the road to getting this right is:- Start now - do not wait until shortly before renewal. Selecting and assimilating information, particularly where you have overseas branches and a greater number of senior management whose input is required, will take far longer than if you are a smaller organisation. Look closely at the structure of your business i.e. the corporate structure and appoint/identify your senior management team. Raise awareness within the business. We have looked at the challenge some insurance group managers have in escalating the subject of insurance to the Board, but you can demonstrate the value of insurance by highlighting historic losses and costs to the business. In conjunction with your broker, prepare detailed notes outlining all the information required. This is the area you will require most input on from your broker. You must rely on your brokers here and do not be tempted to place your own interpretation on your broker's guidance. Try to agree via your broker and with insurers which senior management personnel and areas they want information about. Better negotiation by your broker of contract wording will assist. Seek legal input where appropriate. Be aware of changes in personnel and any challenges about the lack of knowledge that may be a consequence of that. Ensure as a business that insurance is given far greater priority than it has been historically as the benefits of such an approach, in our view, are obvious. In Part 2 we will look at what sort of "knowledge" and information insurers will require at carrying out reasonable searches for information and the practicalities of what that entails. Learn more about the Insurance Act 2015 with our downloadable PDF and articles Part 1 - Duty of Presentation Part 2 - Duty of Presentation Part 3 - Information is King Part 4 - Insurer Knowledge Part 5 (Coming Soon) Part 6 (Coming Soon) Insurance Act 2015 Overview DisclaimerThis document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.]]>{9E1E4413-C176-4B7B-92E7-142FB5B0C264}https://www.shoosmiths.co.uk/news/press-releases/11454.aspxEU Referendum result: Shoosmiths experts comment Shoosmiths' experts in competition, employment, real estate, corporate and commercial comment on the EU referendum result. Competition Law Simon Barnes, head of EU and competition at Shoosmiths The UK's competition laws mirror that of the EU's, therefore the vote to leave should in principle have very little, if any, effect on the competition law assessment of commercial agreements. The leave vote could see changes in how competition law applies to certain types of commercial arrangement, such as distribution and licensing agreements, as the current rules come from the European Commission block exemption regulations and guidelines. These could be discarded now that we have opted out of the EU. Disparities between the UK and EU's competition laws may emerge in the long term when differences in levels of enforcement and court judgements become apparent. Should the EU guidance be repealed, both the lawfulness of commercial arrangements and the compliance to varying rules in different jurisdictions will be a concern for businesses. The EU Merger Regulation will now cease to apply with deals in future potentially having to be reviewed under both the Merger Regulation and the UK's domestic merger rules. Control of State aid can now be retained by the UK, possibly allowing the UK to benefit from public support by way of grants and favourable tax regimes. However, respecting the existing EU rules on this may prove crucial in securing access to the EU single market. Similarly the existing public procurement regime will most likely stay put to promote competitiveness in public tender processes and act as a tool in negotiating single market access. Employment Law Charles Rae, employment partner at Shoosmiths Now that the UK has voted to leave the EU, once Brexit is completed the Government could in theory decide to repeal or revise a significant proportion of the UK's employment laws, where these are laws that are required as part of the UK's membership of the EU. A number of employment laws fall into this category, such as many of the anti-discrimination rights, transfer of undertakings regulations, family leave entitlements, collective consultation obligations, duties to agency workers or working time regulations. However, any kind of wholesale change seems unlikely for a number of reasons. Many of the laws in question have become so ingrained within UK businesses that it seems unlikely the Government would take steps to significantly change or remove them, especially where they provide rights to employees that have become widely accepted and valued. Moreover, much of the UK's employment legislation pre-dates the EU imposed ones, and have instead been built upon by later EU requirements, so the foundations are already in place. For instance, the UK already had race and disability discrimination rules before the EU wide requirements were introduced. Many feel that more likely than repealing laws, the Government would take the opportunity to smooth off some of the less popular requirements set down by the EU, for example restrictions on changing terms and conditions following a TUPE transfer. We may also find that freedom of movement within the EU leaves uncertainty as to the status of EU nationals who already work in the UK (and vice versa). Many businesses rely on EU workers and will want to be satisfied that their right to remain in the UK (and to therefore provide their services) is not going to be adversely affected. Equally, it isn't clear what a Brexit will mean for EU nationals currently working in the UK. Many potential solutions have been mooted, such as a compromise that would see current EU migrants given a set period of time to remain in the UK during which they can apply for citizenship, in return for UK citizens currently abroad to remain where they are on the same basis. Real Estate Simon Boss, real estate partner at Shoosmiths Given that the commercial real estate deals flow has already been impacted by the uncertainty that abounded in the run up to the referendum, we may see some clients putting deals on hold in the wake of the leave result. Equally, we may see some pick up in transactions as some investors look to reduce their exposure to the UK market. For some funds and investors this may present an opportunity to acquire at an attractive price. Since its creation, no Member State has ever left the European Union so we have no clear precedent in regards to what happens next and this is as much the case for the real estate sector as it is for the wider commercial arena. Withdrawal from the EU could have major implications for the construction industry, which is already tackling a labour shortage. Tightened immigration control could now exacerbate this issue, given that a large percentage of EU immigrants work in the construction sector. What many will be waiting most anxiously to determine though is how far foreign investment into British real estate will be impacted by our withdrawal from the EU. Will the position of Britain as a primary choice for commercial real estate investment in Europe suffer? Until some certainty returns to the market, this could well reduce the UK's reputation as a safe haven for real estate investment. Corporate - Private Equity Kieran Toal, corporate partner at Shoosmiths We're now in uncharted waters - no member state has left the EU since its inception and how the economy and UK businesses will fare is hard to predict. However in terms of the Private Equity market, we are dealing with the relative unknown, but investors still need to invest. Admittedly there may be a slow start while buyers take stock but, once the wheels begin to turn, there is a plethora of cash-rich private equity houses with capital to invest and UK businesses with rich growth potential aren't going to lose their appeal overnight. There may well be a shift in focus, with businesses which are particularly reliant on European markets becoming less attractive propositions. But for the most part, likelihood is that the inertia caused by uncertainty over the vote will slowly lift. Commercial - Creative industries Laura Harper, partner in the national Intellectual Property &amp; Creative Industries group and head of the IP &amp; Creative Industries at Shoosmiths I think there is going to be concern and disappointment in the creative industries at this outcome. There are many questions that will have to be answered around funding, free movement of people and collaboration across film, television and the performing arts. Certainly it's no exaggeration to say regulation around Trade Mark protection is going to need redrafting creating uncertainty for companies here and abroad who own EU Trade Marks. The 'out' vote means there is going to have to be a transitional period where companies who have an EU Trade Mark will potentially lose protection in the UK and they will need to audit their TM portfolios to identify the areas which will require attention to ensure they apply for the necessary national coverage. As legal advisers we will provide advice on the basis that UK protection under EU trade marks will be eventually lost until we receive clarity on the transitional provisions to ensure that our clients' interests are fully protected. The patent system has taken decades to negotiate - the Unified Patent and Unified Patent Court was due to be implemented in 2017. With this vote this will probably be delayed and add an extra layer of process to the new Unified Patent and Court procedure.Fri, 24 Jun 2016 00:00:00 +0100<![CDATA[ Shoosmiths' experts in competition, employment, real estate, corporate and commercial comment on the EU referendum result. Competition Law Simon Barnes, head of EU and competition at Shoosmiths The UK's competition laws mirror that of the EU's, therefore the vote to leave should in principle have very little, if any, effect on the competition law assessment of commercial agreements. The leave vote could see changes in how competition law applies to certain types of commercial arrangement, such as distribution and licensing agreements, as the current rules come from the European Commission block exemption regulations and guidelines. These could be discarded now that we have opted out of the EU. Disparities between the UK and EU's competition laws may emerge in the long term when differences in levels of enforcement and court judgements become apparent. Should the EU guidance be repealed, both the lawfulness of commercial arrangements and the compliance to varying rules in different jurisdictions will be a concern for businesses. The EU Merger Regulation will now cease to apply with deals in future potentially having to be reviewed under both the Merger Regulation and the UK's domestic merger rules. Control of State aid can now be retained by the UK, possibly allowing the UK to benefit from public support by way of grants and favourable tax regimes. However, respecting the existing EU rules on this may prove crucial in securing access to the EU single market. Similarly the existing public procurement regime will most likely stay put to promote competitiveness in public tender processes and act as a tool in negotiating single market access. Employment Law Charles Rae, employment partner at Shoosmiths Now that the UK has voted to leave the EU, once Brexit is completed the Government could in theory decide to repeal or revise a significant proportion of the UK's employment laws, where these are laws that are required as part of the UK's membership of the EU. A number of employment laws fall into this category, such as many of the anti-discrimination rights, transfer of undertakings regulations, family leave entitlements, collective consultation obligations, duties to agency workers or working time regulations. However, any kind of wholesale change seems unlikely for a number of reasons. Many of the laws in question have become so ingrained within UK businesses that it seems unlikely the Government would take steps to significantly change or remove them, especially where they provide rights to employees that have become widely accepted and valued. Moreover, much of the UK's employment legislation pre-dates the EU imposed ones, and have instead been built upon by later EU requirements, so the foundations are already in place. For instance, the UK already had race and disability discrimination rules before the EU wide requirements were introduced. Many feel that more likely than repealing laws, the Government would take the opportunity to smooth off some of the less popular requirements set down by the EU, for example restrictions on changing terms and conditions following a TUPE transfer. We may also find that freedom of movement within the EU leaves uncertainty as to the status of EU nationals who already work in the UK (and vice versa). Many businesses rely on EU workers and will want to be satisfied that their right to remain in the UK (and to therefore provide their services) is not going to be adversely affected. Equally, it isn't clear what a Brexit will mean for EU nationals currently working in the UK. Many potential solutions have been mooted, such as a compromise that would see current EU migrants given a set period of time to remain in the UK during which they can apply for citizenship, in return for UK citizens currently abroad to remain where they are on the same basis. Real Estate Simon Boss, real estate partner at Shoosmiths Given that the commercial real estate deals flow has already been impacted by the uncertainty that abounded in the run up to the referendum, we may see some clients putting deals on hold in the wake of the leave result. Equally, we may see some pick up in transactions as some investors look to reduce their exposure to the UK market. For some funds and investors this may present an opportunity to acquire at an attractive price. Since its creation, no Member State has ever left the European Union so we have no clear precedent in regards to what happens next and this is as much the case for the real estate sector as it is for the wider commercial arena. Withdrawal from the EU could have major implications for the construction industry, which is already tackling a labour shortage. Tightened immigration control could now exacerbate this issue, given that a large percentage of EU immigrants work in the construction sector. What many will be waiting most anxiously to determine though is how far foreign investment into British real estate will be impacted by our withdrawal from the EU. Will the position of Britain as a primary choice for commercial real estate investment in Europe suffer? Until some certainty returns to the market, this could well reduce the UK's reputation as a safe haven for real estate investment. Corporate - Private Equity Kieran Toal, corporate partner at Shoosmiths We're now in uncharted waters - no member state has left the EU since its inception and how the economy and UK businesses will fare is hard to predict. However in terms of the Private Equity market, we are dealing with the relative unknown, but investors still need to invest. Admittedly there may be a slow start while buyers take stock but, once the wheels begin to turn, there is a plethora of cash-rich private equity houses with capital to invest and UK businesses with rich growth potential aren't going to lose their appeal overnight. There may well be a shift in focus, with businesses which are particularly reliant on European markets becoming less attractive propositions. But for the most part, likelihood is that the inertia caused by uncertainty over the vote will slowly lift. Commercial - Creative industries Laura Harper, partner in the national Intellectual Property &amp; Creative Industries group and head of the IP &amp; Creative Industries at Shoosmiths I think there is going to be concern and disappointment in the creative industries at this outcome. There are many questions that will have to be answered around funding, free movement of people and collaboration across film, television and the performing arts. Certainly it's no exaggeration to say regulation around Trade Mark protection is going to need redrafting creating uncertainty for companies here and abroad who own EU Trade Marks. The 'out' vote means there is going to have to be a transitional period where companies who have an EU Trade Mark will potentially lose protection in the UK and they will need to audit their TM portfolios to identify the areas which will require attention to ensure they apply for the necessary national coverage. As legal advisers we will provide advice on the basis that UK protection under EU trade marks will be eventually lost until we receive clarity on the transitional provisions to ensure that our clients' interests are fully protected. The patent system has taken decades to negotiate - the Unified Patent and Unified Patent Court was due to be implemented in 2017. With this vote this will probably be delayed and add an extra layer of process to the new Unified Patent and Court procedure.]]>{88642D29-F0E8-44E0-A6DF-BE1547E107A6}https://www.shoosmiths.co.uk/client-resources/legal-updates/business-guide-new-insurance-act-12-august-2016-11396.aspxBusiness Guide to the new Insurance Act (in force from 12 August 2016) Billed as the most significant 'makeover' in insurance law in over a century, the Insurance Act 2015 will change the face of how business runs its insurance portfolio. FREE DOWNLOAD Our Insurance experts have been closely studying commentary and analysis from leading insurers alike on the challenges, hurdles and benefits to business of what has been billed as the most significant insurance "makeover" in more than a century. To find out more, download our free Business Guide to the new Insurance Act. <!-- .whitepaper --> <!-- .ui-form-note --> Complete the form to start your download. First name Last name Email address Phone number Company If you have any questions, you can review our privacy policy for more information. $(document).ready(function () { if ($('#whitepaperdownloadpanel_WhitepaperPanel').is(":visible")) { $('#WhitepaperDownloadPanel').hide(); } }); $('#DownloadBtn').click(function () { $('#whitepaperdownloadpanel_WhitepaperPanel').show(); $('#WhitepaperDownloadPanel').hide(); }); $('#whitepaperdownloadpanel_WhitepaperFormDownloadButton').click(function () { var pagePosition = $(document).scrollTop(); $('#input_position').val(pagePosition); }); $(document).ready(function () { var pagePosition = ''; $(window).scrollTop(pagePosition); }); $('#whitepaperdownloadpanel_WhitepaperFormDownloadButton').click(function () { $('#whitepaperdownloadpanel_WhitePaperButtonPressed').val('true'); }); <!-- .whitepaper-wrapper --> Shoosmiths takes a practical look at the Insurance Act 2015 from a business perspective. We have prepared a short guide (see download panel on the right of this page), setting out our take on the challenges/hurdles you will face and to how to make the best of the new regime. The main purpose Although it is fair to say that the Act aims to place insurance law in a position that is more favourable to an insured, it is still critically important that its implications are understood by all commercial entities purchasing insurance cover in their day to day business lives. In the attached guide, we cover the main aspects of that such as the new "Duty of Fair Presentation" which requires much greater clarity in relation to the information you must provide to an insurer when renewing or entering into a new insurance contract. The landscape between insurers and insureds ought to be fairer and it is true to say that this is the main aim of the new legislation. There is a wide range of knowledge and information currently available on the provisions of the new Act, but there still may be some misconception that there is no need to take action before implementation date, namely 12 August 2016. In our view, the repercussions of failing to address the practicalities of the requirements and duties of the new regime could be significant. Our Guide An urgent review of your own internal processes when looking at compliance with the new Act, ought to be a priority if you have not already prioritised this and starting well ahead of your next insurance renewal is going to be fundamental to taking advantage of the Act's benefits now. In our view, the Insurance Act 2015 demands board level attention across all businesses. We hope you find our Guide useful. In the coming weeks, we will look in more detail at the contents of the Guide, particularly in relation to:- The duty of fair presentation (gathering and assimilating knowledge within your business). The reasonable search for information and what your business needs to know. Presenting with clarity, sufficient and accessible information for insurers. The insurer's perspective. Key new 'terms' and pitfalls. Practical hints and tips on compliance. Final Thought It is, of course, likely that there will be a period of uncertainty as with implementation of any new legislation. What we can be certain about is the appetite to addressing the historic imbalance between the competing interests of policyholders and insurers. Learn more about the Insurance Act 2015 with our downloadable PDF and articles Part 1 - Duty of Presentation Part 2 - Duty of Presentation Part 3 - Information is King Part 4 - Insurer Knowledge Part 5 (Coming Soon) Part 6 (Coming Soon) Insurance Act 2015 Overview DisclaimerThis document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.Wed, 08 Jun 2016 00:00:00 +0100<![CDATA[Paul Eccles Richard Marshall ]]><![CDATA[ Billed as the most significant 'makeover' in insurance law in over a century, the Insurance Act 2015 will change the face of how business runs its insurance portfolio. FREE DOWNLOAD Our Insurance experts have been closely studying commentary and analysis from leading insurers alike on the challenges, hurdles and benefits to business of what has been billed as the most significant insurance "makeover" in more than a century. To find out more, download our free Business Guide to the new Insurance Act. <!-- .whitepaper --> <!-- .ui-form-note --> Complete the form to start your download. First name Last name Email address Phone number Company If you have any questions, you can review our privacy policy for more information. $(document).ready(function () { if ($('#whitepaperdownloadpanel_WhitepaperPanel').is(":visible")) { $('#WhitepaperDownloadPanel').hide(); } }); $('#DownloadBtn').click(function () { $('#whitepaperdownloadpanel_WhitepaperPanel').show(); $('#WhitepaperDownloadPanel').hide(); }); $('#whitepaperdownloadpanel_WhitepaperFormDownloadButton').click(function () { var pagePosition = $(document).scrollTop(); $('#input_position').val(pagePosition); }); $(document).ready(function () { var pagePosition = ''; $(window).scrollTop(pagePosition); }); $('#whitepaperdownloadpanel_WhitepaperFormDownloadButton').click(function () { $('#whitepaperdownloadpanel_WhitePaperButtonPressed').val('true'); }); <!-- .whitepaper-wrapper --> Shoosmiths takes a practical look at the Insurance Act 2015 from a business perspective. We have prepared a short guide (see download panel on the right of this page), setting out our take on the challenges/hurdles you will face and to how to make the best of the new regime. The main purpose Although it is fair to say that the Act aims to place insurance law in a position that is more favourable to an insured, it is still critically important that its implications are understood by all commercial entities purchasing insurance cover in their day to day business lives. In the attached guide, we cover the main aspects of that such as the new "Duty of Fair Presentation" which requires much greater clarity in relation to the information you must provide to an insurer when renewing or entering into a new insurance contract. The landscape between insurers and insureds ought to be fairer and it is true to say that this is the main aim of the new legislation. There is a wide range of knowledge and information currently available on the provisions of the new Act, but there still may be some misconception that there is no need to take action before implementation date, namely 12 August 2016. In our view, the repercussions of failing to address the practicalities of the requirements and duties of the new regime could be significant. Our Guide An urgent review of your own internal processes when looking at compliance with the new Act, ought to be a priority if you have not already prioritised this and starting well ahead of your next insurance renewal is going to be fundamental to taking advantage of the Act's benefits now. In our view, the Insurance Act 2015 demands board level attention across all businesses. We hope you find our Guide useful. In the coming weeks, we will look in more detail at the contents of the Guide, particularly in relation to:- The duty of fair presentation (gathering and assimilating knowledge within your business). The reasonable search for information and what your business needs to know. Presenting with clarity, sufficient and accessible information for insurers. The insurer's perspective. Key new 'terms' and pitfalls. Practical hints and tips on compliance. Final Thought It is, of course, likely that there will be a period of uncertainty as with implementation of any new legislation. What we can be certain about is the appetite to addressing the historic imbalance between the competing interests of policyholders and insurers. Learn more about the Insurance Act 2015 with our downloadable PDF and articles Part 1 - Duty of Presentation Part 2 - Duty of Presentation Part 3 - Information is King Part 4 - Insurer Knowledge Part 5 (Coming Soon) Part 6 (Coming Soon) Insurance Act 2015 Overview DisclaimerThis document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.]]>{A3DFA5FE-DBAD-49AB-8C93-97D650E9489A}https://www.shoosmiths.co.uk/services/insurance-92.aspxInsuranceFri, 27 May 2016 00:00:00 +0100<![CDATA[Paul Eccles Richard Marshall ]]>{71D4296E-E65A-4CB7-AA6D-1E88CF02B36F}https://www.shoosmiths.co.uk/news/press-releases/qm-costs-shoosmiths-host-civil-costs-seminar-10455.aspxQM Costs teams up with Shoosmiths to host free &#39;civil costs and practice&#39; seminar QM Costs, in conjunction with national law firm Shoosmiths and Ben Williams QC, is hosting a free seminar on costs exposure for insurers and businesses. The event, which takes place 3.30-5.30pm on 21 October at the University of Liverpool in London, Finsbury Square will be followed by a drinks reception. The event will provide an update on civil costs in practice under the post Jackson regime, including recent updates to the CPR and case law and offering practical advice in key areas that can have a significant impact on costs exposure. Michael McGowan, head of technical at QM Costs, will be joined on the speaker panel by Paul Eccles, head of insurance at Shoosmiths and Ben Williams QC of 4 New Square. The session will include best practice advice on costs budgeting, Part 36, sanctions and how to avoid the pitfalls of the new costs regime post Jackson. Tim Ryan, managing director of QM Costs, said: 'We're very pleased to be able to host this event in partnership with Shoosmiths. Feedback from our clients shows that there are still many questions around litigation costs and this seminar will help to address these with practical advice on key elements of legal costs management.' Shoosmiths Paul Eccles commented: 'It is now more than two years since the reform of the civil justice system promised to boost efficiency and reduce litigation costs. This seminar will explore the impact of how the introduction of budgeting requirements has worked in practice, Part 36 offers, sanctions, discuss common challenges and offer solutions to help overcome them.' For more information or to reserve a place at the event email Catherine Wong on Catherine.wong@qmlegalcosts.comThu, 24 Sep 2015 00:00:00 +0100<![CDATA[Paul Eccles ]]><![CDATA[ QM Costs, in conjunction with national law firm Shoosmiths and Ben Williams QC, is hosting a free seminar on costs exposure for insurers and businesses. The event, which takes place 3.30-5.30pm on 21 October at the University of Liverpool in London, Finsbury Square will be followed by a drinks reception. The event will provide an update on civil costs in practice under the post Jackson regime, including recent updates to the CPR and case law and offering practical advice in key areas that can have a significant impact on costs exposure. Michael McGowan, head of technical at QM Costs, will be joined on the speaker panel by Paul Eccles, head of insurance at Shoosmiths and Ben Williams QC of 4 New Square. The session will include best practice advice on costs budgeting, Part 36, sanctions and how to avoid the pitfalls of the new costs regime post Jackson. Tim Ryan, managing director of QM Costs, said: 'We're very pleased to be able to host this event in partnership with Shoosmiths. Feedback from our clients shows that there are still many questions around litigation costs and this seminar will help to address these with practical advice on key elements of legal costs management.' Shoosmiths Paul Eccles commented: 'It is now more than two years since the reform of the civil justice system promised to boost efficiency and reduce litigation costs. This seminar will explore the impact of how the introduction of budgeting requirements has worked in practice, Part 36 offers, sanctions, discuss common challenges and offer solutions to help overcome them.' For more information or to reserve a place at the event email Catherine Wong on Catherine.wong@qmlegalcosts.com]]>{5091F353-DEFD-48EF-BD01-332D0B7557BD}https://www.shoosmiths.co.uk/client-resources/legal-updates/the-supreme-court-on-asbestos-cases-9806.aspxThe Supreme Court on asbestos cases The Supreme Court has reversed the ruling of the Court of Appeal in respect of insurers' liability in mesothelioma claims in the case of Zurich Insurance PLC UK Branch (Appellant) -v- International Energy Group Limited (Respondent) [2015] UKSC 33. It was held that, although insurers will have to answer in the first instance for 100% of the compensation awarded against an employer to a claimant who has contracted mesothelioma, the insurer will then have an equitable right to claim pro-rata contributions from any other insurers who provided cover during the period the claimant was exposed to asbestos, or the employer in respect of any missing periods of insurance. The past position in mesothelioma claims In Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22 the House of Lords held that an employee who had been negligently exposed to asbestos by multiple employers, but was unable to prove which period of exposure caused the mesothelioma, could recover against any one of them. In 2006 the scope of Fairchild was limited by the 2006 case, Barker v Corus [2006] UKHL 20, where the House of Lords held that where there had been successive negligent exposures to asbestos in the course of employment, liability should be apportioned between the employers. Unfortunately, the ruling in Barker lengthened the litigation process and, as a result, many claimants experienced long delays before receiving any compensation. Parliament intervened to redress this issue and passed section 3 of the Compensation Act 2006. Section 3 of the 2006 Act applies to the UK only (it does not apply to Guernsey) and established 100% joint and several liability in cases where a person has contracted mesothelioma as a result of being either negligently or in breach of a statutory duty, exposed to asbestos. Therefore, under the 2006 Act, if an employee contracts mesothelioma following negligent exposure to asbestos in the course of their employment with multiple employers, they can claim 100% of their compensation from any employer, and then that employer may seek contributions from the other responsible employers. The facts in IEG v Zurich Mr Carré was resident in Guernsey and employed by Guernsey Gas Light Co Ltd (GGLC) for 27 years from 1961 to 1988. During his employment Mr Carré was consistently and negligently exposed to asbestos and unfortunately, Mr Carré subsequently died from mesothelioma in 2009. Prior to his death Mr Carré sued IEG (GGLC's successor) and recovered £250,000 plus costs in compensation. However, GGLC had the benefit of an employer's liability insurance policy with Zurich for the last six years of Mr Carré's employment and, following the settlement of the claim, IEG sought an indemnity from Zurich. The issue in dispute was whether IEG were entitled to a full indemnity from Zurich for all of its outlay in relation to Mr Carré's claim or whether IEG were only entitled to a contribution from Zurich in respect of the proportion of Mr Carré's exposure that Zurich insured, being 6 out of 27 years. In 2012 the Commercial Court held that IEG was entitled to a full indemnity in respect of its defence costs but only a partial indemnity in respect of the compensation, based on the six years of Mr Carré's 27 year employment during which Zurich were the insurer. Following an appeal by IEG and cross appeal by Zurich, in 2013, the Court of Appeal held that Zurich was liable to indemnify IEG for all of the damages in respect of Mr Carré's claim which included IEG's defence costs. Zurich appealed to the Supreme Court. The decision of the Supreme Court The Supreme Court held that in Guernsey the common law rule in Barker continues to apply (as the 2006 Act does not apply) and, accordingly, Zurich were only liable to contribute a proportion of IEG's outlay in respect of the period they were the insurer. However, the Supreme Court held that, if the same facts were heard in the UK (where the 2006 Act does apply) then Zurich would be responsible for 100% of the loss in the first instance with an equitable right to a contribution, on a pro-rata basis, from any other insurers who had policies in place during the period of exposure and, in respect of any period where there is no such insurer, from IEG itself. The Supreme Court also held that in either the UK or in Guernsey the defence costs are treated the same and IEG are entitled to a full indemnity from Zurich. The reason for this being that the defence costs would have been incurred whatever the period of exposure and were incurred with the insurer's consent in defending the claim. The Judgment also states that had IEG been insolvent it is probable that Mr Carré would have been able to obtain 100% of his compensation from Zurich. Impact for insurers and employers Both insurers and employers will need to be aware of the difference in approach for Guernsey and UK based claims: Guernsey Based Claims insurers will only be liable for contributions in respect of the proportion of exposure that they insured. employers will be liable for any missing periods of insurance. UK Based Claims insurers will be answerable in the first instance for 100% of an employer's outlay and then will have to seek contributions, where possible, from any other insurers and employers. insurers will also be on risk for 100% of damages where there are no other solvent insurers or employers to contribute. employers also need to be aware that they may have to contribute for any missing periods of insurance. Defence Costs In either jurisdiction insurers will be liable for the employer's defence costs in dealing with a mesothelioma claim. DisclaimerThis document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. Fri, 22 May 2015 00:00:00 +0100<![CDATA[Paul Eccles ]]><![CDATA[ The Supreme Court has reversed the ruling of the Court of Appeal in respect of insurers' liability in mesothelioma claims in the case of Zurich Insurance PLC UK Branch (Appellant) -v- International Energy Group Limited (Respondent) [2015] UKSC 33. It was held that, although insurers will have to answer in the first instance for 100% of the compensation awarded against an employer to a claimant who has contracted mesothelioma, the insurer will then have an equitable right to claim pro-rata contributions from any other insurers who provided cover during the period the claimant was exposed to asbestos, or the employer in respect of any missing periods of insurance. The past position in mesothelioma claims In Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22 the House of Lords held that an employee who had been negligently exposed to asbestos by multiple employers, but was unable to prove which period of exposure caused the mesothelioma, could recover against any one of them. In 2006 the scope of Fairchild was limited by the 2006 case, Barker v Corus [2006] UKHL 20, where the House of Lords held that where there had been successive negligent exposures to asbestos in the course of employment, liability should be apportioned between the employers. Unfortunately, the ruling in Barker lengthened the litigation process and, as a result, many claimants experienced long delays before receiving any compensation. Parliament intervened to redress this issue and passed section 3 of the Compensation Act 2006. Section 3 of the 2006 Act applies to the UK only (it does not apply to Guernsey) and established 100% joint and several liability in cases where a person has contracted mesothelioma as a result of being either negligently or in breach of a statutory duty, exposed to asbestos. Therefore, under the 2006 Act, if an employee contracts mesothelioma following negligent exposure to asbestos in the course of their employment with multiple employers, they can claim 100% of their compensation from any employer, and then that employer may seek contributions from the other responsible employers. The facts in IEG v Zurich Mr Carré was resident in Guernsey and employed by Guernsey Gas Light Co Ltd (GGLC) for 27 years from 1961 to 1988. During his employment Mr Carré was consistently and negligently exposed to asbestos and unfortunately, Mr Carré subsequently died from mesothelioma in 2009. Prior to his death Mr Carré sued IEG (GGLC's successor) and recovered £250,000 plus costs in compensation. However, GGLC had the benefit of an employer's liability insurance policy with Zurich for the last six years of Mr Carré's employment and, following the settlement of the claim, IEG sought an indemnity from Zurich. The issue in dispute was whether IEG were entitled to a full indemnity from Zurich for all of its outlay in relation to Mr Carré's claim or whether IEG were only entitled to a contribution from Zurich in respect of the proportion of Mr Carré's exposure that Zurich insured, being 6 out of 27 years. In 2012 the Commercial Court held that IEG was entitled to a full indemnity in respect of its defence costs but only a partial indemnity in respect of the compensation, based on the six years of Mr Carré's 27 year employment during which Zurich were the insurer. Following an appeal by IEG and cross appeal by Zurich, in 2013, the Court of Appeal held that Zurich was liable to indemnify IEG for all of the damages in respect of Mr Carré's claim which included IEG's defence costs. Zurich appealed to the Supreme Court. The decision of the Supreme Court The Supreme Court held that in Guernsey the common law rule in Barker continues to apply (as the 2006 Act does not apply) and, accordingly, Zurich were only liable to contribute a proportion of IEG's outlay in respect of the period they were the insurer. However, the Supreme Court held that, if the same facts were heard in the UK (where the 2006 Act does apply) then Zurich would be responsible for 100% of the loss in the first instance with an equitable right to a contribution, on a pro-rata basis, from any other insurers who had policies in place during the period of exposure and, in respect of any period where there is no such insurer, from IEG itself. The Supreme Court also held that in either the UK or in Guernsey the defence costs are treated the same and IEG are entitled to a full indemnity from Zurich. The reason for this being that the defence costs would have been incurred whatever the period of exposure and were incurred with the insurer's consent in defending the claim. The Judgment also states that had IEG been insolvent it is probable that Mr Carré would have been able to obtain 100% of his compensation from Zurich. Impact for insurers and employers Both insurers and employers will need to be aware of the difference in approach for Guernsey and UK based claims: Guernsey Based Claims insurers will only be liable for contributions in respect of the proportion of exposure that they insured. employers will be liable for any missing periods of insurance. UK Based Claims insurers will be answerable in the first instance for 100% of an employer's outlay and then will have to seek contributions, where possible, from any other insurers and employers. insurers will also be on risk for 100% of damages where there are no other solvent insurers or employers to contribute. employers also need to be aware that they may have to contribute for any missing periods of insurance. Defence Costs In either jurisdiction insurers will be liable for the employer's defence costs in dealing with a mesothelioma claim. DisclaimerThis document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. ]]>{77ABAFE1-5208-4EEC-A910-F8523FDD6C75}https://www.shoosmiths.co.uk/client-resources/legal-updates/negative-declarations-insurers-product-construction-policies-9592.aspxNegative declarations for insurers and the meaning of &#39;Product&#39; in construction policies The Court of Appeal has expressed reservations about dealing with applications for declarations of non-liability by insurers in circumstances where the factual interpretation of the claim is contentious. In Aspen Insurance UK Ltd v Adana Construction Ltd [2015] EWCA Civ 176 (Aspen), Aspen applied for a declaration of non-liability in respect of a construction all risks insurance policy it had issued to Adana. The dispute related to the collapse of a crane which had been sitting on a crane base upon which Adana had undertaken works. Aspen sought a declaration that any liability of Adana in relation to the collapse of the crane would not be covered under the policy. However, issues of fact which could impact on policy interpretation remained unresolved. Decision Both the Commercial Court and the Court of Appeal expressed strong reservations about making any declaration of no policy liability in an 'evidential vacuum' which could impact on policy liability analysis. Both courts made it clear that the appropriate time to consider underlying facts is during any liability trial. Nevertheless, (apparently motivated by a desire to ensure that the time and cost incurred by the parties would not go to waste) the courts did in each case go as far as each could to provide an analysis of what the policy coverage position would be in the range of possible scenarios apparent on the facts available at the time. In making their assessments, however, both courts laboured the potential for any preliminary determination to be unseated by later evidence from the liability trial. The Court of Appeal also provided useful guidance on the definition of a 'product' in the context of construction liability where product is not clearly defined. The court acknowledged that each case would turn on its own facts and an interpretation of the specific wider policy wording in the light of what a reasonable person with the background knowledge of the parties would take the policy to mean. However, the court held that a product in this case meant something moveable and tangible that could be supplied by one person to another, rather than something which only came into existence to form part of the land on which it was created. The court also refused to consider the insurer's claim that there was a market understanding as to the interrelationship between the public and product liability sections of the policy, stating that this was not relevant to the interpretation of the policy. Comment The courts have recently become more willing to grant negative declarations, but it is important to remember that such declarations are still a discretionary remedy. The Aspen case is a useful precedent that a court will be unwilling to make any final interpretations where developments in factual evidence could affect the way the policy is interpreted. It is clear that there is a place in insurance litigation for declaration proceedings, which can be a powerful tool, but this decision will provide food for thought for insurers. The following practical points may assist insurers: declaration proceedings will be more powerful in circumstances where the insurer can have sufficient confidence that the underlying facts are not contentious and therefore cannot be later "side-stepped" by factual evidence which places a different slant on the policy. a declaration of non-liability cannot be used to crystallise the factual basis of any liability claim. there is no one-size-fits-all definition of 'product' for construction all risks insurance policies, and insurers will not be able to rely on 'market understandings' to influence the courts to accept their interpretation of a policy. Policies need to contain clear wording wherever practicable to ensure that they operate in the manner intended. If you are in any doubt as to whether a negative declaration is appropriate in a case you are involved in or you require further information, please do not hesitate to contact the author or a member of the specialist insurance litigation team. DisclaimerThis document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. Tue, 14 Apr 2015 00:00:00 +0100<![CDATA[Matthew Brown Richard Marshall ]]><![CDATA[ The Court of Appeal has expressed reservations about dealing with applications for declarations of non-liability by insurers in circumstances where the factual interpretation of the claim is contentious. In Aspen Insurance UK Ltd v Adana Construction Ltd [2015] EWCA Civ 176 (Aspen), Aspen applied for a declaration of non-liability in respect of a construction all risks insurance policy it had issued to Adana. The dispute related to the collapse of a crane which had been sitting on a crane base upon which Adana had undertaken works. Aspen sought a declaration that any liability of Adana in relation to the collapse of the crane would not be covered under the policy. However, issues of fact which could impact on policy interpretation remained unresolved. Decision Both the Commercial Court and the Court of Appeal expressed strong reservations about making any declaration of no policy liability in an 'evidential vacuum' which could impact on policy liability analysis. Both courts made it clear that the appropriate time to consider underlying facts is during any liability trial. Nevertheless, (apparently motivated by a desire to ensure that the time and cost incurred by the parties would not go to waste) the courts did in each case go as far as each could to provide an analysis of what the policy coverage position would be in the range of possible scenarios apparent on the facts available at the time. In making their assessments, however, both courts laboured the potential for any preliminary determination to be unseated by later evidence from the liability trial. The Court of Appeal also provided useful guidance on the definition of a 'product' in the context of construction liability where product is not clearly defined. The court acknowledged that each case would turn on its own facts and an interpretation of the specific wider policy wording in the light of what a reasonable person with the background knowledge of the parties would take the policy to mean. However, the court held that a product in this case meant something moveable and tangible that could be supplied by one person to another, rather than something which only came into existence to form part of the land on which it was created. The court also refused to consider the insurer's claim that there was a market understanding as to the interrelationship between the public and product liability sections of the policy, stating that this was not relevant to the interpretation of the policy. Comment The courts have recently become more willing to grant negative declarations, but it is important to remember that such declarations are still a discretionary remedy. The Aspen case is a useful precedent that a court will be unwilling to make any final interpretations where developments in factual evidence could affect the way the policy is interpreted. It is clear that there is a place in insurance litigation for declaration proceedings, which can be a powerful tool, but this decision will provide food for thought for insurers. The following practical points may assist insurers: declaration proceedings will be more powerful in circumstances where the insurer can have sufficient confidence that the underlying facts are not contentious and therefore cannot be later "side-stepped" by factual evidence which places a different slant on the policy. a declaration of non-liability cannot be used to crystallise the factual basis of any liability claim. there is no one-size-fits-all definition of 'product' for construction all risks insurance policies, and insurers will not be able to rely on 'market understandings' to influence the courts to accept their interpretation of a policy. Policies need to contain clear wording wherever practicable to ensure that they operate in the manner intended. If you are in any doubt as to whether a negative declaration is appropriate in a case you are involved in or you require further information, please do not hesitate to contact the author or a member of the specialist insurance litigation team. DisclaimerThis document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. ]]>{CD2734DC-36FB-40FA-A70D-A767FEE30872}https://www.shoosmiths.co.uk/client-resources/legal-updates/profits-high-court-measures-loss-of-profits-sugar-hut-blaze-8802.aspxThe &#39;Only Way is&#39; Profits: High Court measures loss of profits in the wake of Sugar Hut blaze What was the issue? In the recent case of Sugar Hut Group Ltd v AJ Insurance, the High Court was asked to consider the business interruption losses arising out of a fire at the now famous club 'Sugar Hut' in Brentwood, Essex. Background The fire took place at the club in September 2009, in the days before the venue took centre stage in the popular TV programme 'The Only Way is Essex'. The blaze caused extensive damage to the club and resulted in a 49 week period of closure for its owners. In the initial action in 2012, the group's insurance provider avoided liability on the grounds of breach of warranty and material non-disclosure. The group had (1) failed to disclose, at the outset of the cover, that several of the group companies had gone into administration due to financial difficulties, and (2) failed to adhere to several of the 'true warranties' set out in the policy document, relating to frying and cooking equipment, burglar alarm systems and metal wheelie bins. Importantly, even though the cause of the fire was not directly linked to the breached warranties, they rendered the policy void and cover was declined. The case The 2014 case arose out of the group's subsequent claim in negligence against its insurance broker, AJ Insurance. Prior to trial the broker accepted liability and agreed to a settlement of 65% of the group's losses, together with agreed costs for property damage, and the group's legal fees in the failed 2012 case. The question before the High Court was therefore: how to measure the loss of profits incurred during the period of closure? Mr. Justice Eder was presented with contrasting methods by the parties' two expert accountants. Firstly, the group's expert suggested a figure of £1,345,794, calculated by reference to an average of the club's trading profits both before and after the fire (the latter being significantly higher than the former). By comparison, the broker's expert suggested a figure of £385,776, calculated by reference to the turnover pre-fire, together with an uplift in line with the Consumer Price Index (CPI). However, neither method provided a satisfactory solution. Firstly, the post-fire turnover was not directly comparable with the period before the fire, due to the fact that the owner, Michael Norcross, had invested £1.5 million in expanding the club during the closed period. The club was effectively a 'new club', enjoying increased capacities and significantly higher revenues. Secondly, the new club derived benefit from the 'TOWIE effect', by virtue of publicity from its appearance on the TV show after the fire. Mr Norcross argued that, while the show had placed the club on the tourist map, it had also driven away the pre-existing clientele who were the 'bigger spenders'. Nonetheless, the Court was persuaded that the club's continued involvement with 'TOWIE' was a strong indication that the TOWIE effect contributed to higher trading figures. Thirdly, fluctuations in trade were also attributable to the effect of the recession and seasonal trends in the nightclub industry. In conclusion, the Judge ignored the post-fire trading figures and based his calculation on the 11 month trading period before the fire. In doing so, Eder J acknowledged general increases in turnover by applying a 20% uplift to part of the period of closure, together with a notional equivalent to CPI for the remainder. In total, the group was awarded £715,047 (inclusive of interest) out of a claim for £1.35 million. What lessons can be learnt from the case? The case is a reminder of the importance of the obligations on insured parties to disclose all material facts and comply with key warranties during the period of cover. It highlights the complexities that can arise in claiming loss of profits, and provides a precedent on how to calculate loss of profits in cases where there are significant differences in a business' turnover before and after an insured peril. How can we help? For advice on all commercial insurance issues, including policy cover disputes, professional indemnity, non-contentious transactional support, business interruption and fire/flood claims, please contact Paul Eccles: paul.eccles@shoosmiths.co.uk or 03700 868 8741. DisclaimerThis document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. Thu, 04 Dec 2014 00:00:00 Z<![CDATA[Paul Eccles ]]><![CDATA[ What was the issue? In the recent case of Sugar Hut Group Ltd v AJ Insurance, the High Court was asked to consider the business interruption losses arising out of a fire at the now famous club 'Sugar Hut' in Brentwood, Essex. Background The fire took place at the club in September 2009, in the days before the venue took centre stage in the popular TV programme 'The Only Way is Essex'. The blaze caused extensive damage to the club and resulted in a 49 week period of closure for its owners. In the initial action in 2012, the group's insurance provider avoided liability on the grounds of breach of warranty and material non-disclosure. The group had (1) failed to disclose, at the outset of the cover, that several of the group companies had gone into administration due to financial difficulties, and (2) failed to adhere to several of the 'true warranties' set out in the policy document, relating to frying and cooking equipment, burglar alarm systems and metal wheelie bins. Importantly, even though the cause of the fire was not directly linked to the breached warranties, they rendered the policy void and cover was declined. The case The 2014 case arose out of the group's subsequent claim in negligence against its insurance broker, AJ Insurance. Prior to trial the broker accepted liability and agreed to a settlement of 65% of the group's losses, together with agreed costs for property damage, and the group's legal fees in the failed 2012 case. The question before the High Court was therefore: how to measure the loss of profits incurred during the period of closure? Mr. Justice Eder was presented with contrasting methods by the parties' two expert accountants. Firstly, the group's expert suggested a figure of £1,345,794, calculated by reference to an average of the club's trading profits both before and after the fire (the latter being significantly higher than the former). By comparison, the broker's expert suggested a figure of £385,776, calculated by reference to the turnover pre-fire, together with an uplift in line with the Consumer Price Index (CPI). However, neither method provided a satisfactory solution. Firstly, the post-fire turnover was not directly comparable with the period before the fire, due to the fact that the owner, Michael Norcross, had invested £1.5 million in expanding the club during the closed period. The club was effectively a 'new club', enjoying increased capacities and significantly higher revenues. Secondly, the new club derived benefit from the 'TOWIE effect', by virtue of publicity from its appearance on the TV show after the fire. Mr Norcross argued that, while the show had placed the club on the tourist map, it had also driven away the pre-existing clientele who were the 'bigger spenders'. Nonetheless, the Court was persuaded that the club's continued involvement with 'TOWIE' was a strong indication that the TOWIE effect contributed to higher trading figures. Thirdly, fluctuations in trade were also attributable to the effect of the recession and seasonal trends in the nightclub industry. In conclusion, the Judge ignored the post-fire trading figures and based his calculation on the 11 month trading period before the fire. In doing so, Eder J acknowledged general increases in turnover by applying a 20% uplift to part of the period of closure, together with a notional equivalent to CPI for the remainder. In total, the group was awarded £715,047 (inclusive of interest) out of a claim for £1.35 million. What lessons can be learnt from the case? The case is a reminder of the importance of the obligations on insured parties to disclose all material facts and comply with key warranties during the period of cover. It highlights the complexities that can arise in claiming loss of profits, and provides a precedent on how to calculate loss of profits in cases where there are significant differences in a business' turnover before and after an insured peril. How can we help? For advice on all commercial insurance issues, including policy cover disputes, professional indemnity, non-contentious transactional support, business interruption and fire/flood claims, please contact Paul Eccles: paul.eccles@shoosmiths.co.uk or 03700 868 8741. DisclaimerThis document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. ]]>{2C9B9FE8-EE6D-4731-9503-18E513F9D65B}https://www.shoosmiths.co.uk/client-resources/legal-updates/qocs-bite-back-8176.aspxQOCS bite back! The recent Court of Appeal case, Wagenaar -v- Weekend Travel Limited and Serradj [2014] (Wagenaar) highlights the importance of costs consideration for defendants in personal injury claims. The facts In this case, the claimant brought a claim against the defendant tour operator for injuries suffered whilst on a ski holiday in France. The claimant alleged negligence on the part of the defendant's supplier, a third party ski instructor. The defendant then brought a Part 20 additional claim against the third party ski instructor for indemnity and contribution against the third party. The decision Both claims were dismissed and in the first instance, the judge ordered that the defendant was awarded its costs against the claimant and that the third party was awarded her costs against the defendant. However, the judge went on to apply qualified one way costs shifting ("QOCS") to both claims. This meant that both parties were liable to pay their own costs. QOCS was introduced as a part of the Jackson Reforms in April 2013. If a claimant wins a case, they recover their costs, but claimants do not pay costs orders in favour of the other side, except up to the extent of any damages and interest awarded. The defendant and the third party appealed against the decision on the basis that the QOCS provisions were ultra vires (or "beyond powers") and that the QOCS provisions did not apply to the additional Part 20 claim. The Court of Appeal rejected the argument that the QOCS rules were ultra vires. The court stated that relevant legislation was to be read subject to the powers of the rules committee and that the rule making authority has every right to control the exercise of its discretion in relation to costs. Thus, the defendant's appeal was dismissed. However, the third party was successful in its appeal. The court agreed that the QOCS provisions were intended to protect injured parties from facing adverse costs consequences. The QOCS provisions were not applicable under a Part 20 claim in relation to apportionment of damages. Practical implications The Court of Appeal has stated that the QOCS provisions apply to personal injury cases and not to any additional claims which do not involve personal injury. Therefore, defendants will need to consider whether it would be economical to bring a Part 20 claim as this could leave them exposed to additional costs. Indeed in the Wagenaar case, the defendant would have actually been better off if both claims had succeeded! Fri, 15 Aug 2014 00:00:00 +0100<![CDATA[Paul Eccles ]]><![CDATA[ The recent Court of Appeal case, Wagenaar -v- Weekend Travel Limited and Serradj [2014] (Wagenaar) highlights the importance of costs consideration for defendants in personal injury claims. The facts In this case, the claimant brought a claim against the defendant tour operator for injuries suffered whilst on a ski holiday in France. The claimant alleged negligence on the part of the defendant's supplier, a third party ski instructor. The defendant then brought a Part 20 additional claim against the third party ski instructor for indemnity and contribution against the third party. The decision Both claims were dismissed and in the first instance, the judge ordered that the defendant was awarded its costs against the claimant and that the third party was awarded her costs against the defendant. However, the judge went on to apply qualified one way costs shifting ("QOCS") to both claims. This meant that both parties were liable to pay their own costs. QOCS was introduced as a part of the Jackson Reforms in April 2013. If a claimant wins a case, they recover their costs, but claimants do not pay costs orders in favour of the other side, except up to the extent of any damages and interest awarded. The defendant and the third party appealed against the decision on the basis that the QOCS provisions were ultra vires (or "beyond powers") and that the QOCS provisions did not apply to the additional Part 20 claim. The Court of Appeal rejected the argument that the QOCS rules were ultra vires. The court stated that relevant legislation was to be read subject to the powers of the rules committee and that the rule making authority has every right to control the exercise of its discretion in relation to costs. Thus, the defendant's appeal was dismissed. However, the third party was successful in its appeal. The court agreed that the QOCS provisions were intended to protect injured parties from facing adverse costs consequences. The QOCS provisions were not applicable under a Part 20 claim in relation to apportionment of damages. Practical implications The Court of Appeal has stated that the QOCS provisions apply to personal injury cases and not to any additional claims which do not involve personal injury. Therefore, defendants will need to consider whether it would be economical to bring a Part 20 claim as this could leave them exposed to additional costs. Indeed in the Wagenaar case, the defendant would have actually been better off if both claims had succeeded! ]]>{FBE4BA2D-06D1-445D-BDA0-D9117F6BB4CE}https://www.shoosmiths.co.uk/client-resources/legal-updates/we-predict-a-riot-7729.aspxWe predict a riot Court of appeal rules business interruption and other consequential losses can now be recovered from the police after London riots. The Riot (Damages) Act 1886 has always allowed claims for physical damage. However, following the London riots there have been further attempts by local businesses and their insurers to claim consequential losses such as loss of profit and loss of rent following the damage or destruction to local businesses. In September 2013 the High Court held that parties could only claim direct losses from the police (such as claims for physical damage to property) and could not recover any consequential losses. This week the Court of Appeal overturned the High Court decision (a link to that judgment can be found here). As a result, property owners and insurers can now recover compensation for losses such as loss of profit and loss of rent that were caused in the London riots. What does this mean for insurers? This decision will undoubtedly be welcomed by those affected by the riots as well as their insurers. The decision may prompt insurers to revisit previously rejected claims. However, insurers will undoubtedly find that the police will begin to take a harder line on loss adjusting, liability investigations and contributory negligence to minimise their future exposure. In addition, it must be remembered the police are entitled to fix the compensation amount to that which they consider 'just' taking into account the actions of the business including whether the businesses took appropriate precautions. As such the police are likely to carry out far more in-depth investigations as to the behaviour of the businesses themselves and use this to try to "fix" the compensation and reduce the amounts they pay out. Watch this space.. The Court was very critical of the current law and it is expected that Parliament may look to change this moving forwards. In addition it remains possible that police will seek to appeal the decision given the significant financial implications. However, unless this decision is successfully appealed local businesses and their insurers will now be able to claim consequential losses caused by the London riots from the police force.Thu, 29 May 2014 00:00:00 +0100<![CDATA[Jonathan Smart Paul Eccles ]]><![CDATA[ Court of appeal rules business interruption and other consequential losses can now be recovered from the police after London riots. The Riot (Damages) Act 1886 has always allowed claims for physical damage. However, following the London riots there have been further attempts by local businesses and their insurers to claim consequential losses such as loss of profit and loss of rent following the damage or destruction to local businesses. In September 2013 the High Court held that parties could only claim direct losses from the police (such as claims for physical damage to property) and could not recover any consequential losses. This week the Court of Appeal overturned the High Court decision (a link to that judgment can be found here). As a result, property owners and insurers can now recover compensation for losses such as loss of profit and loss of rent that were caused in the London riots. What does this mean for insurers? This decision will undoubtedly be welcomed by those affected by the riots as well as their insurers. The decision may prompt insurers to revisit previously rejected claims. However, insurers will undoubtedly find that the police will begin to take a harder line on loss adjusting, liability investigations and contributory negligence to minimise their future exposure. In addition, it must be remembered the police are entitled to fix the compensation amount to that which they consider 'just' taking into account the actions of the business including whether the businesses took appropriate precautions. As such the police are likely to carry out far more in-depth investigations as to the behaviour of the businesses themselves and use this to try to "fix" the compensation and reduce the amounts they pay out. Watch this space.. The Court was very critical of the current law and it is expected that Parliament may look to change this moving forwards. In addition it remains possible that police will seek to appeal the decision given the significant financial implications. However, unless this decision is successfully appealed local businesses and their insurers will now be able to claim consequential losses caused by the London riots from the police force.]]>{B727DC62-D31D-453E-A3B3-430BC7768B7D}https://www.shoosmiths.co.uk/client-resources/legal-updates/a-reminder-employers-liability-changes-what-they-mean-for-you-6786.aspxA reminder - Employers&#39; Liability changes - what they mean for you Section 69 of the Enterprise and Regulatory Reform Act 2013 (the "2013 Act") came into effect on 1 October 2013, and is seen by many as the biggest change to the law on employers' liability for twenty years. This is nothing new but we do well to remind ourselves of the anticipated impact. It is a key part of the current government's drive to counter the perceived "compensation culture" and to remove some of the red tape and associated costs faced by businesses complying with their health and safety obligations. What has changed? Under the old law, employees who suffered injury at work could claim against their employers for breach of any of the many statutory duties imposed on businesses by health and safety regulations, unless the regulation in question expressly said that they could not. None of the main so-called "six pack" regulations said this, leaving employers open to claims in relation to all of these statutory duties. The position has now been effectively turned on its head. Thanks to the 2013 Act, employees will not be able to claim for breach of statutory duty unless the regulation expressly says that they can. The only regulations that did expressly provide for civil liability have now been amended, so that unless further changes are made there will be no room for employees to claim under the regulations. This means that employers will now only be liable to compensate employees where it can be shown that the employer was negligent. The aim is to redress the balance in favour of employers by removing the concept of "strict liability". As a result, employers will no longer be vulnerable to compensation claims where they have done everything reasonable to protect their workers from injury in the workplace. A case often used to demonstrate the unfairness of the current system is Stark v Post Office 2000 I.C.R 1013. In that case, the Post Office was held to liable for the injuries of a postman who fell off a company bicycle when the stirrup broke due to metal fatigue or an unknown manufacturing defect, even though a reasonable system of inspection and maintenance had been used. When did the changes take effect? The key date will be when the alleged breach of duty took place. The new regime will apply where this was on or after 1 October 2013. Where the alleged breach took place before that date, the old rules will still apply, even where, for example, symptoms of illnesses with a long latency period do not appear until many years from now. Impact of the changes The precise impact of the reforms, particularly in the short term, is uncertain. What is not in doubt, though, is the significance of the changes: In the short term at least, there is likely to be some delay and increased litigation cost related to employers' liability claims. There are bound to be fewer amicable settlements, which were encouraged by the certainty offered by the old system, and the uncertainty caused by the changes will need to play out in the courts. This does, though, also provide an opportunity for insurers to look to achieve more favourable decisions from the courts going forward. One area that is particularly unclear is the effect of the reforms on public bodies. It is possible that employees of such bodies, which it has been held can include nationalised corporations and private water companies as well as government departments and the like, will seek to bring direct civil claims under the regulations as before under EU law. This would create a disparity between the rights of public and private sector workers which has not yet been properly addressed. In the longer term, the changes may well favour employers and insurers, as a certain proportion of claims, especially those relying on strict liability, become defendable by employers, and employees face up to the difficulties of proving that businesses have been negligent. This does need to be balanced, however, against the additional costs both parties will need to incur to investigate liability at an early stage in proceedings Employers should not actually be changing their approach to health and safety to any great extent. An employer's duty as stated by the courts remains to take "positive thought for the safety of his workers in the light of what he knows or ought to know", and whilst employees will no longer be claiming directly for breach of the regulations, those regulations are sure to be used by claimants and accepted by the courts as a good indication of whether an employer has acted reasonably. Businesses also still face the risk of prosecution by the HSE for any breach of health and safety regulations. Insurers may find that businesses do begin to take more of a relaxed attitude to health and safety, and that this in fact leads to more accidents and more notifications. However, this still means increased difficulty faced by workers in bringing claims, which comes on top of other recent defendant-friendly reforms relating to the recoverability of success fees and ATE premiums.Fri, 24 Jan 2014 00:00:00 Z<![CDATA[Paul Eccles ]]><![CDATA[ Section 69 of the Enterprise and Regulatory Reform Act 2013 (the "2013 Act") came into effect on 1 October 2013, and is seen by many as the biggest change to the law on employers' liability for twenty years. This is nothing new but we do well to remind ourselves of the anticipated impact. It is a key part of the current government's drive to counter the perceived "compensation culture" and to remove some of the red tape and associated costs faced by businesses complying with their health and safety obligations. What has changed? Under the old law, employees who suffered injury at work could claim against their employers for breach of any of the many statutory duties imposed on businesses by health and safety regulations, unless the regulation in question expressly said that they could not. None of the main so-called "six pack" regulations said this, leaving employers open to claims in relation to all of these statutory duties. The position has now been effectively turned on its head. Thanks to the 2013 Act, employees will not be able to claim for breach of statutory duty unless the regulation expressly says that they can. The only regulations that did expressly provide for civil liability have now been amended, so that unless further changes are made there will be no room for employees to claim under the regulations. This means that employers will now only be liable to compensate employees where it can be shown that the employer was negligent. The aim is to redress the balance in favour of employers by removing the concept of "strict liability". As a result, employers will no longer be vulnerable to compensation claims where they have done everything reasonable to protect their workers from injury in the workplace. A case often used to demonstrate the unfairness of the current system is Stark v Post Office 2000 I.C.R 1013. In that case, the Post Office was held to liable for the injuries of a postman who fell off a company bicycle when the stirrup broke due to metal fatigue or an unknown manufacturing defect, even though a reasonable system of inspection and maintenance had been used. When did the changes take effect? The key date will be when the alleged breach of duty took place. The new regime will apply where this was on or after 1 October 2013. Where the alleged breach took place before that date, the old rules will still apply, even where, for example, symptoms of illnesses with a long latency period do not appear until many years from now. Impact of the changes The precise impact of the reforms, particularly in the short term, is uncertain. What is not in doubt, though, is the significance of the changes: In the short term at least, there is likely to be some delay and increased litigation cost related to employers' liability claims. There are bound to be fewer amicable settlements, which were encouraged by the certainty offered by the old system, and the uncertainty caused by the changes will need to play out in the courts. This does, though, also provide an opportunity for insurers to look to achieve more favourable decisions from the courts going forward. One area that is particularly unclear is the effect of the reforms on public bodies. It is possible that employees of such bodies, which it has been held can include nationalised corporations and private water companies as well as government departments and the like, will seek to bring direct civil claims under the regulations as before under EU law. This would create a disparity between the rights of public and private sector workers which has not yet been properly addressed. In the longer term, the changes may well favour employers and insurers, as a certain proportion of claims, especially those relying on strict liability, become defendable by employers, and employees face up to the difficulties of proving that businesses have been negligent. This does need to be balanced, however, against the additional costs both parties will need to incur to investigate liability at an early stage in proceedings Employers should not actually be changing their approach to health and safety to any great extent. An employer's duty as stated by the courts remains to take "positive thought for the safety of his workers in the light of what he knows or ought to know", and whilst employees will no longer be claiming directly for breach of the regulations, those regulations are sure to be used by claimants and accepted by the courts as a good indication of whether an employer has acted reasonably. Businesses also still face the risk of prosecution by the HSE for any breach of health and safety regulations. Insurers may find that businesses do begin to take more of a relaxed attitude to health and safety, and that this in fact leads to more accidents and more notifications. However, this still means increased difficulty faced by workers in bringing claims, which comes on top of other recent defendant-friendly reforms relating to the recoverability of success fees and ATE premiums.]]>{EACFE841-7197-4057-8B89-0BFDAD34CD31}https://www.shoosmiths.co.uk/client-resources/legal-updates/commercial-court-rules-no-riot-for-insurers-or-business-6080.aspxCommercial Court rules &#39;no riot&#39; for insurers or business The Commercial Court has ruled that consequential losses arising from riots cannot be recovered from the public purse. Rioting in cities and towns across the UK in August 2011 brought into sharp focus insured and uninsured losses for businesses. The Riot (Damages) Act 1886 provides that where premises are damaged or destroyed by rioters, anyone who suffers loss as a result, including insurers, can claim fair compensation from the statutory body responsible for overseeing the local police. The recent decision in Mitsui Sumitomo Insurance Co and Others v The Mayor's Office for Policing and Crime and two other actions (see link below for full judgment) restricts the losses that can be claimed under the Act, with potentially undoubted financial implications for UK businesses and insurers alike. There were two preliminary issues to be decided: First issue This case involved the looting and burning to the ground by a group of youths of the Sony distribution warehouse, in Enfield, amidst widespread disorder and rioting that followed the shooting by police of Mark Duggan. The court was asked in the first instance to consider whether the necessary ingredients were present in the rioters' behaviour to establish a claim under the Act. The court reasserted that, in particular, for any compensation to be payable: the behaviour of the rioters, though it need not necessarily be noisy, must not be stealthy, and should have a sufficiently public character it must involve wanton damage to property, rather than damage done only for the purposes of stealing Bearing these points in mind, the Honourable Mr Justice Flaux, at paragraph 69 of his judgment, ruled that '...the group of youths who attacked, looted and set fire to the warehouse were "persons riotously and tumultuously assembled together" within the meaning of the 1886 Act'. So far, so good. However: Second issue The second preliminary issue to be determined by the court was the correct construction of the losses recoverable under the Act, once it has been established that a claim could be brought. Here, the court concluded at paragraph 113 of the judgment that '...the answer to the second preliminary issue is ultimately a short one.The compensation payable is limited to physical damage to the relevant premises or property in it and does not extend to consequential losses such as loss of profit or loss of rent'. Hefty price tag Insurers and perhaps uninsured businesses may understandably be disappointed by the court's decision, at least in the short term. In some cases, significant sums are at stake. Going forward, subject to appeal, both UK businesses and the insurance industry will need to reflect on what levels of compensation they can expect to receive from the public purse and in what circumstances, should such a situation present itself again. However, perhaps another significant legacy of this decision will be its impact on the current push by the ABI to modernise the Act, and in particular to improve the claims process under it. Either way, any repeat of the sort of disorder in 2011 could come with a hefty price tag for those who do not consider the effects of this decision and any possible appeal. Full judgment: http://www.bailii.org/ew/cases/EWHC/Comm/2013/2734.htmlMon, 30 Sep 2013 00:00:00 +0100<![CDATA[Paul Eccles ]]><![CDATA[ The Commercial Court has ruled that consequential losses arising from riots cannot be recovered from the public purse. Rioting in cities and towns across the UK in August 2011 brought into sharp focus insured and uninsured losses for businesses. The Riot (Damages) Act 1886 provides that where premises are damaged or destroyed by rioters, anyone who suffers loss as a result, including insurers, can claim fair compensation from the statutory body responsible for overseeing the local police. The recent decision in Mitsui Sumitomo Insurance Co and Others v The Mayor's Office for Policing and Crime and two other actions (see link below for full judgment) restricts the losses that can be claimed under the Act, with potentially undoubted financial implications for UK businesses and insurers alike. There were two preliminary issues to be decided: First issue This case involved the looting and burning to the ground by a group of youths of the Sony distribution warehouse, in Enfield, amidst widespread disorder and rioting that followed the shooting by police of Mark Duggan. The court was asked in the first instance to consider whether the necessary ingredients were present in the rioters' behaviour to establish a claim under the Act. The court reasserted that, in particular, for any compensation to be payable: the behaviour of the rioters, though it need not necessarily be noisy, must not be stealthy, and should have a sufficiently public character it must involve wanton damage to property, rather than damage done only for the purposes of stealing Bearing these points in mind, the Honourable Mr Justice Flaux, at paragraph 69 of his judgment, ruled that '...the group of youths who attacked, looted and set fire to the warehouse were "persons riotously and tumultuously assembled together" within the meaning of the 1886 Act'. So far, so good. However: Second issue The second preliminary issue to be determined by the court was the correct construction of the losses recoverable under the Act, once it has been established that a claim could be brought. Here, the court concluded at paragraph 113 of the judgment that '...the answer to the second preliminary issue is ultimately a short one.The compensation payable is limited to physical damage to the relevant premises or property in it and does not extend to consequential losses such as loss of profit or loss of rent'. Hefty price tag Insurers and perhaps uninsured businesses may understandably be disappointed by the court's decision, at least in the short term. In some cases, significant sums are at stake. Going forward, subject to appeal, both UK businesses and the insurance industry will need to reflect on what levels of compensation they can expect to receive from the public purse and in what circumstances, should such a situation present itself again. However, perhaps another significant legacy of this decision will be its impact on the current push by the ABI to modernise the Act, and in particular to improve the claims process under it. Either way, any repeat of the sort of disorder in 2011 could come with a hefty price tag for those who do not consider the effects of this decision and any possible appeal. Full judgment: http://www.bailii.org/ew/cases/EWHC/Comm/2013/2734.html]]>{D0262ED4-D484-4BB8-B968-7965841A9B15}https://www.shoosmiths.co.uk/client-resources/legal-updates/code-practice-well-maintained-highways-non-mandatory-5720.aspxCode of practice for well-maintained highways held to be non-mandatory guidance Some local authorities may have been concerned by the decision of Mrs Justice Slade in AC v Devon CC [2012] EWHC 796 (QB,) which held that the recommended inspection interval of roads in a non-statutory code of practice was a mandatory standard. The facts Whilst overtaking a slower moving vehicle on a country road the vehicle left the road to the nearside and the passengers were seriously injured in the ensuing crash into trees alongside the road. The passengers sued the driver and the driver made a third-party claim against the highway authority - Devon County Council - alleging that the defective state of the offside of the road caused him to lose control. Devon had in place its own manual for road inspection and treatment of defects, and it categorised the road in question as a local distributor road with an inspection frequency of six months. The Code suggested an inspection frequency of one month for this category of road. Mrs Justice Slade held that the driver succeeded in his claim that Devon was in breach of its duty under s.41 of the Highways Act to maintain the relevant section of the road and that Devon did not establish the statutory defence under s.58. She also held the driver was not contributorily negligent. The county council appealed the decision in AC and others v TR and another [2013] EWCA Civ 418. The Court of Appeal considered the following issues Was there a breach of section 41 Highways Act 1980? i.e. was the road in a condition which exposed those using it in the ordinary way to danger? If yes: Was the accident caused by that breach? If yes: Has the Highways Authority made out the statutory defence under section 58 Highways Act 1980? i.e. have they taken all reasonable care? If no: Was there any contributory negligence on the part of the driver? The court declined to interfere with the findings of the lower court on section 41 and causation. The Court of Appeal held that section 41 was made out and that the accident was caused by that breach. The Court of Appeal was, however, critical of the judge's approach to the section 58 defence in principle. The court held that while the Code is clearly evidence of general good practice, its status must not be overstated. The Code does not set out mandatory rules and highway authorities must exercise their own judgment. Hughes LJ stated that: "Further, again consistently with the status of the Code, it is plain fact that the categorisation of roads is a matter of assessment left to the authority rather than of hard and fast rule......At the very least, the evidence of the practice of other authorities pointed towards a respectably held view, amongst professionals charged with highways maintenance, that six monthly inspections of local distributor roads were a reasonable response to the duty to maintain. On the well understood Bolam principle that evidence went towards showing that Devon had exercised reasonable care in its general policy for such roads." The court held that the judge's findings on a lack of reasonable care could not stand as it was founded on an erroneous approach to the Code. However, the Court of Appeal went on to consider if this particular road called for greater frequency of inspection on the facts. The judge at first instance had considered as evidence detailed inspection reports for the road in question over a period of three and a half years. This evidence demonstrated that on every inspection except one, the last, the road had been found to have significant safety defects calling for immediate or urgent repair. Moreover, the road was known to be subject to overriding damage of the kind which was involved in the accident. Evidence from Devon's highways officer confirmed that this particular road was used by heavy goods and large agricultural vehicles, and that given the soft verge it was prone to overriding damage. The harvest months of August and September were likely to cause movement of large agricultural vehicles and that period would have come after the last inspection and not long before the accident. It was accepted by the highways officer that it was not just foreseeable but probable, that the verge rutting would occur on this road which, if not dealt with, would lead to edge deterioration. The Court of Appeal therefore held that that there was sufficient evidence to justify the first instance judge's conclusion that this particular road needed inspection at shorter intervals than six months and therefore they upheld her decision that the section 58 statutory defence had not been made out. Highways authorities need to ensure that they are not overly reliant on conformity with stated inspection frequency to make out their statutory defence. The authority needs to take into account if a particular road warrants increased frequency of inspections due to factors such as known issues, heavy traffic etc. Mon, 15 Jul 2013 00:00:00 +0100<![CDATA[Paul Eccles Rubina Zaidi ]]><![CDATA[ Some local authorities may have been concerned by the decision of Mrs Justice Slade in AC v Devon CC [2012] EWHC 796 (QB,) which held that the recommended inspection interval of roads in a non-statutory code of practice was a mandatory standard. The facts Whilst overtaking a slower moving vehicle on a country road the vehicle left the road to the nearside and the passengers were seriously injured in the ensuing crash into trees alongside the road. The passengers sued the driver and the driver made a third-party claim against the highway authority - Devon County Council - alleging that the defective state of the offside of the road caused him to lose control. Devon had in place its own manual for road inspection and treatment of defects, and it categorised the road in question as a local distributor road with an inspection frequency of six months. The Code suggested an inspection frequency of one month for this category of road. Mrs Justice Slade held that the driver succeeded in his claim that Devon was in breach of its duty under s.41 of the Highways Act to maintain the relevant section of the road and that Devon did not establish the statutory defence under s.58. She also held the driver was not contributorily negligent. The county council appealed the decision in AC and others v TR and another [2013] EWCA Civ 418. The Court of Appeal considered the following issues Was there a breach of section 41 Highways Act 1980? i.e. was the road in a condition which exposed those using it in the ordinary way to danger? If yes: Was the accident caused by that breach? If yes: Has the Highways Authority made out the statutory defence under section 58 Highways Act 1980? i.e. have they taken all reasonable care? If no: Was there any contributory negligence on the part of the driver? The court declined to interfere with the findings of the lower court on section 41 and causation. The Court of Appeal held that section 41 was made out and that the accident was caused by that breach. The Court of Appeal was, however, critical of the judge's approach to the section 58 defence in principle. The court held that while the Code is clearly evidence of general good practice, its status must not be overstated. The Code does not set out mandatory rules and highway authorities must exercise their own judgment. Hughes LJ stated that: "Further, again consistently with the status of the Code, it is plain fact that the categorisation of roads is a matter of assessment left to the authority rather than of hard and fast rule......At the very least, the evidence of the practice of other authorities pointed towards a respectably held view, amongst professionals charged with highways maintenance, that six monthly inspections of local distributor roads were a reasonable response to the duty to maintain. On the well understood Bolam principle that evidence went towards showing that Devon had exercised reasonable care in its general policy for such roads." The court held that the judge's findings on a lack of reasonable care could not stand as it was founded on an erroneous approach to the Code. However, the Court of Appeal went on to consider if this particular road called for greater frequency of inspection on the facts. The judge at first instance had considered as evidence detailed inspection reports for the road in question over a period of three and a half years. This evidence demonstrated that on every inspection except one, the last, the road had been found to have significant safety defects calling for immediate or urgent repair. Moreover, the road was known to be subject to overriding damage of the kind which was involved in the accident. Evidence from Devon's highways officer confirmed that this particular road was used by heavy goods and large agricultural vehicles, and that given the soft verge it was prone to overriding damage. The harvest months of August and September were likely to cause movement of large agricultural vehicles and that period would have come after the last inspection and not long before the accident. It was accepted by the highways officer that it was not just foreseeable but probable, that the verge rutting would occur on this road which, if not dealt with, would lead to edge deterioration. The Court of Appeal therefore held that that there was sufficient evidence to justify the first instance judge's conclusion that this particular road needed inspection at shorter intervals than six months and therefore they upheld her decision that the section 58 statutory defence had not been made out. Highways authorities need to ensure that they are not overly reliant on conformity with stated inspection frequency to make out their statutory defence. The authority needs to take into account if a particular road warrants increased frequency of inspections due to factors such as known issues, heavy traffic etc. ]]>{5AD0C4E6-A803-4CCA-B5B7-07B642F51D2E}https://www.shoosmiths.co.uk/client-resources/legal-updates/assessment-of-costs-in-exaggerated-claims-4390.aspxAssessment of costs in exaggerated claims A recent High Court decision in Brit Inns v BDW Trading Ltd considered the circumstances in which a successful claimant would have to pay the majority of the defendant's costs The facts Claimants Brit Inns Limited instructed the defendant company BDW Trading Limited to build a new restaurant, which later flooded as a result of the defendant's work. The claimants made a subrogated claim against the defendant for £660,000 in respect of insured losses (the main action), and also claimed £522,000 in respect of uninsured losses (the uninsured claim). The defendant did not dispute liability, but did dispute the level of damages. In the end, the Court awarded the claimants only £157,467 in the main claim; and £16,403 in the uninsured claim - approximately 25% and 3% of the sums claimed respectively. Of course, both parties had racked up considerable costs in the proceedings, dwarfing the sums recovered. The court had to consider the correct approach to costs where it was clear that the claimant, although successful, had greatly exaggerated the claim. The decision The court acknowledged that the claimants were the 'successful party', but went on to consider their conduct in the claim. The court felt that the claimant and the claimants' solicitors had been intentionally unhelpful throughout the trial, and that the claimants' expert witness evidence had been fundamentally flawed. While the claims were not dishonestly or deliberately exaggerated, they were so obviously flawed the claimants should have changed their approach early on. Had the claimants behaved themselves and acted properly throughout the litigation, the court considered, the case would have settled long before. Even though the claimants were 'successful', it would not have been appropriate for the defendants to cover the costs. In the main claim, both parties had made Part 36 offers, but had subsequently failed to beat them (although the defendant's offers were considered far more reasonable), so the court also considered other offers made. The first offer, which was 'beaten' by the party that made it, was an offer from the defendants, which expired on 30 May 2012. With that in mind, the court ordered the defendants to pay 60% of the claimants' costs up to 30 May 2012 (being the date on which the offer expired), and the claimants to pay all of the defendants costs from that date on. In respect of the uninsured claim, neither party had made a Part 36 payment, although the defendant's Part 44 offer also covered the uninsured losses. The court considered it unusual for a claim for uninsured losses not to be grouped with a subrogated claim and thought the claimants should have to pay for the 'luxury' of having a second trial, noting that an award of 3% of the damages claimed was in fact 'a failure on a grand scale'. Somewhat shockingly, in the uninsured claim, the court ordered the claimants to pay 90% of defendant's costs. Spiral out of control This case highlights that when litigation 'goes wrong', costs can very quickly spiral out of control, and even dwarf the sums disputed. In these cases, even 'winning' will not necessarily guarantee a favourable costs order. It is essential that parties are careful to conduct themselves properly throughout the trial, by being helpful to the other party and the court where appropriate, by pleading, by ensuring that evidence submitted is carefully reviewed, and by valuing the claim critically and honestly. It also shows the benefits that can come from making a carefully considered offer early in the process. While in this case neither party made a successful Part 36 offer, it was the defendant's Part 44 offer which saved them from substantially higher costs.Tue, 18 Dec 2012 00:00:00 Z<![CDATA[Paul Eccles ]]><![CDATA[ A recent High Court decision in Brit Inns v BDW Trading Ltd considered the circumstances in which a successful claimant would have to pay the majority of the defendant's costs The facts Claimants Brit Inns Limited instructed the defendant company BDW Trading Limited to build a new restaurant, which later flooded as a result of the defendant's work. The claimants made a subrogated claim against the defendant for £660,000 in respect of insured losses (the main action), and also claimed £522,000 in respect of uninsured losses (the uninsured claim). The defendant did not dispute liability, but did dispute the level of damages. In the end, the Court awarded the claimants only £157,467 in the main claim; and £16,403 in the uninsured claim - approximately 25% and 3% of the sums claimed respectively. Of course, both parties had racked up considerable costs in the proceedings, dwarfing the sums recovered. The court had to consider the correct approach to costs where it was clear that the claimant, although successful, had greatly exaggerated the claim. The decision The court acknowledged that the claimants were the 'successful party', but went on to consider their conduct in the claim. The court felt that the claimant and the claimants' solicitors had been intentionally unhelpful throughout the trial, and that the claimants' expert witness evidence had been fundamentally flawed. While the claims were not dishonestly or deliberately exaggerated, they were so obviously flawed the claimants should have changed their approach early on. Had the claimants behaved themselves and acted properly throughout the litigation, the court considered, the case would have settled long before. Even though the claimants were 'successful', it would not have been appropriate for the defendants to cover the costs. In the main claim, both parties had made Part 36 offers, but had subsequently failed to beat them (although the defendant's offers were considered far more reasonable), so the court also considered other offers made. The first offer, which was 'beaten' by the party that made it, was an offer from the defendants, which expired on 30 May 2012. With that in mind, the court ordered the defendants to pay 60% of the claimants' costs up to 30 May 2012 (being the date on which the offer expired), and the claimants to pay all of the defendants costs from that date on. In respect of the uninsured claim, neither party had made a Part 36 payment, although the defendant's Part 44 offer also covered the uninsured losses. The court considered it unusual for a claim for uninsured losses not to be grouped with a subrogated claim and thought the claimants should have to pay for the 'luxury' of having a second trial, noting that an award of 3% of the damages claimed was in fact 'a failure on a grand scale'. Somewhat shockingly, in the uninsured claim, the court ordered the claimants to pay 90% of defendant's costs. Spiral out of control This case highlights that when litigation 'goes wrong', costs can very quickly spiral out of control, and even dwarf the sums disputed. In these cases, even 'winning' will not necessarily guarantee a favourable costs order. It is essential that parties are careful to conduct themselves properly throughout the trial, by being helpful to the other party and the court where appropriate, by pleading, by ensuring that evidence submitted is carefully reviewed, and by valuing the claim critically and honestly. It also shows the benefits that can come from making a carefully considered offer early in the process. While in this case neither party made a successful Part 36 offer, it was the defendant's Part 44 offer which saved them from substantially higher costs.]]>{6BC6E219-87FB-45ED-B316-A47D8144AC81}https://www.shoosmiths.co.uk/client-resources/legal-updates/court-of-appeal-clarifies-general-damages-increase-4214.aspxCourt of Appeal clarifies general damages increase In July 2012, the Court of Appeal held that the amount of general damages in certain types of tort claims would be increased by 10%. This was to be applicable in cases where judgment was given after 1 April 2013. It included general damages for: pain, suffering and loss of amenity in respect of personal injury nuisance defamation all other torts which would cause suffering, inconvenience or distress to individuals Following the judgment, there was concern that the decision would open the floodgates for certain claimants. The decision meant that those who entered into a conditional fee agreement (CFA) before 1 April 2013 - and were awarded damages after 1 April 2013 - would be entitled to both the 10% increase in damages and the continued recoverability of any success fee. Application by Association of British Insurers In August 2012, the Association of British Insurers (ABI) applied to the Court inviting it to reconsider the July judgment on the basis that the 10% increase in general damages should apply only to cases where the claimant's funding arrangements have been agreed after 1 April 2013. The basis of the application was that: it was illogical and unfair on defendants if, after 1 April 2013, a claimant could benefit from not only an increased damages award, but also the recoverability of a success fee under a CFA entered into before 1 April 2013 claimants who had not entered into a CFA and separately represented litigants, should be entitled to the 10% increase only if their letter of claim or claim form was served after 1 April 2013 The Personal Injuries Bar Association argued that there was no good reason to limit the 10% increase in damages to tort cases, and that it should be extended to claims based in contract. Further, the heads of damage to which the increase applies should be widened to 'non-pecuniary loss for suffering, inconvenience or distress to individuals'. Revised judgment Earlier this month, the Court handed down revised guidance (see Simmons v Castle [2012] EWCA Civ 1288). It confirmed that: general damages and personal injury and clinical negligence cases will increase by 10% for those cases decided after 1 April. However, where the claimant had the benefit of a CFA before 1 April 2013, they will not receive the increase in general damages the increase in damages will apply to both contract and tort cases The revised judgment should give some comfort to insurers, as the Court of Appeal has clarified one of the Jackson Reforms that takes effect from 1 April 2013. The case is interesting on a procedural level, because the Court of Appeal was satisfied that it had jurisdiction to reconsider its earlier judgment on an application by a non-party to the proceedings. The court was prepared to treat the application as being made by ABI through the defendant. It is crucial to remember, however, that this decision does not create a precedent for disgruntled litigants to apply to the Court of Appeal to have their decisions reconsidered; the circumstances of this case were exceptional. If you would like to discuss any of the issues arising out of this briefing, please get in touch.Tue, 30 Oct 2012 00:00:00 Z<![CDATA[Paul Eccles ]]><![CDATA[ In July 2012, the Court of Appeal held that the amount of general damages in certain types of tort claims would be increased by 10%. This was to be applicable in cases where judgment was given after 1 April 2013. It included general damages for: pain, suffering and loss of amenity in respect of personal injury nuisance defamation all other torts which would cause suffering, inconvenience or distress to individuals Following the judgment, there was concern that the decision would open the floodgates for certain claimants. The decision meant that those who entered into a conditional fee agreement (CFA) before 1 April 2013 - and were awarded damages after 1 April 2013 - would be entitled to both the 10% increase in damages and the continued recoverability of any success fee. Application by Association of British Insurers In August 2012, the Association of British Insurers (ABI) applied to the Court inviting it to reconsider the July judgment on the basis that the 10% increase in general damages should apply only to cases where the claimant's funding arrangements have been agreed after 1 April 2013. The basis of the application was that: it was illogical and unfair on defendants if, after 1 April 2013, a claimant could benefit from not only an increased damages award, but also the recoverability of a success fee under a CFA entered into before 1 April 2013 claimants who had not entered into a CFA and separately represented litigants, should be entitled to the 10% increase only if their letter of claim or claim form was served after 1 April 2013 The Personal Injuries Bar Association argued that there was no good reason to limit the 10% increase in damages to tort cases, and that it should be extended to claims based in contract. Further, the heads of damage to which the increase applies should be widened to 'non-pecuniary loss for suffering, inconvenience or distress to individuals'. Revised judgment Earlier this month, the Court handed down revised guidance (see Simmons v Castle [2012] EWCA Civ 1288). It confirmed that: general damages and personal injury and clinical negligence cases will increase by 10% for those cases decided after 1 April. However, where the claimant had the benefit of a CFA before 1 April 2013, they will not receive the increase in general damages the increase in damages will apply to both contract and tort cases The revised judgment should give some comfort to insurers, as the Court of Appeal has clarified one of the Jackson Reforms that takes effect from 1 April 2013. The case is interesting on a procedural level, because the Court of Appeal was satisfied that it had jurisdiction to reconsider its earlier judgment on an application by a non-party to the proceedings. The court was prepared to treat the application as being made by ABI through the defendant. It is crucial to remember, however, that this decision does not create a precedent for disgruntled litigants to apply to the Court of Appeal to have their decisions reconsidered; the circumstances of this case were exceptional. If you would like to discuss any of the issues arising out of this briefing, please get in touch.]]>{B6128A30-D758-4B6C-8325-0472CE29D85D}https://www.shoosmiths.co.uk/client-resources/legal-updates/supreme-court-rules-on-strike-out-for-dishonest-claimants-1491.aspxSupreme Court rules on strike out for dishonest claimants The Supreme Court of the United Kingdom has today (27 June) handed down judgment in the case of Fairclough Homes Limited (Appellant) v Summers (Respondent). Judgment deals with two central issues: where a defendant was still held liable for damages even though the claimant submitted an exaggerated/dishonest claim whether the court still had the power to strike-out the whole claim on the basis that it was an abuse of process i.e. tainted by dishonesty when that power should be exercised The Supreme Court unanimously held that while the Courts did have jurisdiction to strike-out a claim for abuse of process, it declined to exercise the power in the circumstances of this case. Facts The claimant initially brought a case against his former employer alleging breach of duty and/or negligence. The respondent succeeded on liability at first instance in the county court with damages to be assessed at a later date. As a result of surveillance evidence, the appellants were able to argue that the respondent was 'grossly exaggerating' his injuries and ability to work. The appellants asserted in their defence that the claim was dishonestly exaggerated and should be struck-out. The respondent did not challenge the surveillance evidence. All the respondent's pleadings were supported by Statements of Truth. Trial The trial judge held that the respondent had suffered serious fractures, requiring at least 2 operations. However, the trial judge also found beyond reasonable doubt that the respondent had fraudulently misstated the extent of his injury, and had deliberately lied to medical experts and to the DWP. A greatly reduced award was made; The Respondent received some £88,000 out of the original £850,000 originally claimed. The Court of Appeal The Appellants argued that the court had power to strike-out a claim in its entirety where dishonesty or fraud was present, amounting to abuse of process. The Court of Appeal rejected that argument, considering itself bound by earlier decisions. Supreme Court decision The Supreme Court did find that courts had the power, within the CPR, to strike-out a claim for abuse of process, but that this should only be exercised in exceptional circumstances. Only where a court was satisfied that the parties' 'abuse' was such to amount to a forfeiture of the right to have the claim determined, would this be appropriate. A Supreme Court press release issued today noted: "The Court rejects the submission that unless exaggerated claims are struck out, dishonest claimants will not be deterred. There are many other ways in which deterrence can be achieved. These include ensuring that the dishonesty does not increase the award of damages, making orders for costs (including indemnity costs), reducing interest, proceedings for contempt and criminal proceedings. In appropriate cases adverse inferences can also be drawn against the claimant." In essence, although the respondent knew he was bringing a false claim in part and therefore guilty of a serious abuse of process, he still suffered a significant injury as a result of the appellant's breach of duty of care. The Supreme Court held, therefore, that in the circumstances of this particular case 'it would not be proportionate or just to strike the claim out'. So it appears that much of what was in place prior to the handing down of this judgment remains in place, and a number of arguments and remedies are clearly open to defendants and their insurers to challenge dishonest claims. Equally, however, it seems the law remains reluctant to strike-out a case in its entirety where some genuine measure of loss has been suffered although the Court did say that such a measure might be proportionate where "there had been a massive attempt to deceive the Court but the award of damages would be very small." See full Supreme Court press summary at: http://www.supremecourt.gov.uk/docs/UKSC_2010_0212_ps.pdfWed, 27 Jun 2012 00:00:00 +0100<![CDATA[Paul Eccles ]]><![CDATA[ The Supreme Court of the United Kingdom has today (27 June) handed down judgment in the case of Fairclough Homes Limited (Appellant) v Summers (Respondent). Judgment deals with two central issues: where a defendant was still held liable for damages even though the claimant submitted an exaggerated/dishonest claim whether the court still had the power to strike-out the whole claim on the basis that it was an abuse of process i.e. tainted by dishonesty when that power should be exercised The Supreme Court unanimously held that while the Courts did have jurisdiction to strike-out a claim for abuse of process, it declined to exercise the power in the circumstances of this case. Facts The claimant initially brought a case against his former employer alleging breach of duty and/or negligence. The respondent succeeded on liability at first instance in the county court with damages to be assessed at a later date. As a result of surveillance evidence, the appellants were able to argue that the respondent was 'grossly exaggerating' his injuries and ability to work. The appellants asserted in their defence that the claim was dishonestly exaggerated and should be struck-out. The respondent did not challenge the surveillance evidence. All the respondent's pleadings were supported by Statements of Truth. Trial The trial judge held that the respondent had suffered serious fractures, requiring at least 2 operations. However, the trial judge also found beyond reasonable doubt that the respondent had fraudulently misstated the extent of his injury, and had deliberately lied to medical experts and to the DWP. A greatly reduced award was made; The Respondent received some £88,000 out of the original £850,000 originally claimed. The Court of Appeal The Appellants argued that the court had power to strike-out a claim in its entirety where dishonesty or fraud was present, amounting to abuse of process. The Court of Appeal rejected that argument, considering itself bound by earlier decisions. Supreme Court decision The Supreme Court did find that courts had the power, within the CPR, to strike-out a claim for abuse of process, but that this should only be exercised in exceptional circumstances. Only where a court was satisfied that the parties' 'abuse' was such to amount to a forfeiture of the right to have the claim determined, would this be appropriate. A Supreme Court press release issued today noted: "The Court rejects the submission that unless exaggerated claims are struck out, dishonest claimants will not be deterred. There are many other ways in which deterrence can be achieved. These include ensuring that the dishonesty does not increase the award of damages, making orders for costs (including indemnity costs), reducing interest, proceedings for contempt and criminal proceedings. In appropriate cases adverse inferences can also be drawn against the claimant." In essence, although the respondent knew he was bringing a false claim in part and therefore guilty of a serious abuse of process, he still suffered a significant injury as a result of the appellant's breach of duty of care. The Supreme Court held, therefore, that in the circumstances of this particular case 'it would not be proportionate or just to strike the claim out'. So it appears that much of what was in place prior to the handing down of this judgment remains in place, and a number of arguments and remedies are clearly open to defendants and their insurers to challenge dishonest claims. Equally, however, it seems the law remains reluctant to strike-out a case in its entirety where some genuine measure of loss has been suffered although the Court did say that such a measure might be proportionate where "there had been a massive attempt to deceive the Court but the award of damages would be very small." See full Supreme Court press summary at: http://www.supremecourt.gov.uk/docs/UKSC_2010_0212_ps.pdf]]>{904EF2F6-3520-4645-B1B5-98A16A242BD2}https://www.shoosmiths.co.uk/no-search/liability-of-parent-companies-and-the-actions-of-their-subsidiaries-1498.aspxLiability of parent companies and the actions of their subsidiaries A long-awaited High Court appeal decision could have considerable implications for businesses. A long-awaited High Court appeal decision could have considerable implications for businesses, especially concerning the long held belief that a parent company as a separate legal entity from its subsidiaries could not be held responsible for the subsidiaries' failings or liability. The facts In the case of David Chandler v Cape Plc (Court of Appeal 2012 EWCA CIV 525), Cape has lost its appeal against the decision awarding David Chandler £120,000 compensation for his asbestosis after he was exposed to asbestos at a subsidiary company, Cape Building Products Limited. There was no doubt about the cause of Mr Chandler's asbestosis or that the subsidiary company had been negligent and in breach of its statutory duty in exposing Mr Chandler to asbestos. However, Cape Building Products no longer existed, and there were no employers' liability policies in place to cover the claim. It was a wholly owned subsidiary of Cape Plc, so Mr Chandler pursued his claim against the parent company. Decision at first instance The High Court judge applied a three-stage test when deciding whether Cape Plc should be liable for the actions of its subsidiary: Whether it was reasonably foreseeable to them as the Parent Company that Mr Chandler may suffer from an asbestos related illness. How close was the proximity between Cape Plc and Mr Chandler? In essence, was the business of the parent and subsidiary the same, did the parent have any superior knowledge of some relevant aspect of health and safety, did the parent know or ought to have known that the subsidiary's system of work was unsafe? Whether it was fair, just, and reasonable for the parent to owe a duty of care to an employee of its subsidiary company. The judge at first instance determined that Cape Plc had actual knowledge of Mr Chandler's working conditions, and so the risk of his suffering asbestosis disease was foreseeable. Further, it had employed scientific and medical officers responsible for health and safety issues, including those of the subsidiary companies, to ensure they were not exposed to harm. The appeal Cape Plc argued on appeal that it should not be liable, as it did not have complete control of the subsidiary company. This principal argument was rejected. In effect, it had extended its duty of care by the provision of the group-wide occupational health provisions. In other words, the appeal decision was founded on the basis of the common law concept of 'assumption of responsibility'. While the Court of Appeal accepted that Cape 'was not responsible for the actual implementation of the health and safety measures at Cape Products', Cape had assumed a duty of care either to advise Cape Products on what steps it had to take and to ensure those steps were taken. The Court of Appeal has made it clear now, that in appropriate circumstances the law may well impose on a parent company, responsibility for the health and safety of its subsidiary's employees. Does this pierce the corporate veil? The Court of Appeal 'emphatically rejects any suggestion that it is in any way concerned with what is usually referred to as piercing the corporate veil'. The court further stated that '...a subsidiary and its company are separate entities. There is no imposition or assumption of responsibility by reason only that a company is the parent company of another company. The question is simply whether what the parent company did amounted to taking on a direct duty to the subsidiaries' employees. The overriding message must be that if there is any degree to which a parent has some relevant or superior knowledge of health and safety in a particular industry, coupled with knowledge that a subsidiary's system of work is unsafe, and that it is foreseeable that the subsidiary or its employees would rely on the parent's superior knowledge, then it is not necessary to show that the parent is intervening in the running of the subsidiary. Of course, on the facts of this case it is highly relevant that Cape had employed medical and other officers responsible for safety issues for itself and the subsidiary. In essence, the corporate veil in these circumstances is pierced, but only on the basis of an existing concept of assumption of responsibility - Caparo Industries v Dickman 1990 - by its actions or knowledge. No doubt there will be cases which follow this and cases which are capable of being distinguished. The insurance angle Parent companies should review their existing claims portfolios with insurers to ensure that their employers' liability cover does in fact cover any potential liability. Other potential danger zones to look for from an insurance angle are: Is there sufficient cover in place? Does the parent carry a large deductible? Does the potential for such an argument in existing cases you have give rise to a 'circumstance', which might give rise to a claim triggering claims notification provisions in insurance policies? Indeed, is there an actual claim triggering notice provisions? Does this raise any potential non-disclosure issues for the parent company when renewing policies pending resolution of the claim i.e. should the claim be disclosed? What is the financial impact on premiums for your existing claims portfolios? If in any doubt, do immediately discuss issues with your broker and insurers alike. Final thought It is correct that this is one of the first cases in which an employee has established, at trial, liability to him on the part of his employer's parent company in this type of employers' liability case. However, until a similar case comes before the court, it is difficult to predict how the courts may interpret, apply or distinguish in the future. The real area of focus is assumption of responsibility, the parent's knowledge both express or implied, as well as looking at whether the parent has intervened in the health and safety policies or other aspects of the subsidiary.Fri, 04 May 2012 00:00:00 +0100<![CDATA[Paul Eccles ]]><![CDATA[ A long-awaited High Court appeal decision could have considerable implications for businesses. A long-awaited High Court appeal decision could have considerable implications for businesses, especially concerning the long held belief that a parent company as a separate legal entity from its subsidiaries could not be held responsible for the subsidiaries' failings or liability. The facts In the case of David Chandler v Cape Plc (Court of Appeal 2012 EWCA CIV 525), Cape has lost its appeal against the decision awarding David Chandler £120,000 compensation for his asbestosis after he was exposed to asbestos at a subsidiary company, Cape Building Products Limited. There was no doubt about the cause of Mr Chandler's asbestosis or that the subsidiary company had been negligent and in breach of its statutory duty in exposing Mr Chandler to asbestos. However, Cape Building Products no longer existed, and there were no employers' liability policies in place to cover the claim. It was a wholly owned subsidiary of Cape Plc, so Mr Chandler pursued his claim against the parent company. Decision at first instance The High Court judge applied a three-stage test when deciding whether Cape Plc should be liable for the actions of its subsidiary: Whether it was reasonably foreseeable to them as the Parent Company that Mr Chandler may suffer from an asbestos related illness. How close was the proximity between Cape Plc and Mr Chandler? In essence, was the business of the parent and subsidiary the same, did the parent have any superior knowledge of some relevant aspect of health and safety, did the parent know or ought to have known that the subsidiary's system of work was unsafe? Whether it was fair, just, and reasonable for the parent to owe a duty of care to an employee of its subsidiary company. The judge at first instance determined that Cape Plc had actual knowledge of Mr Chandler's working conditions, and so the risk of his suffering asbestosis disease was foreseeable. Further, it had employed scientific and medical officers responsible for health and safety issues, including those of the subsidiary companies, to ensure they were not exposed to harm. The appeal Cape Plc argued on appeal that it should not be liable, as it did not have complete control of the subsidiary company. This principal argument was rejected. In effect, it had extended its duty of care by the provision of the group-wide occupational health provisions. In other words, the appeal decision was founded on the basis of the common law concept of 'assumption of responsibility'. While the Court of Appeal accepted that Cape 'was not responsible for the actual implementation of the health and safety measures at Cape Products', Cape had assumed a duty of care either to advise Cape Products on what steps it had to take and to ensure those steps were taken. The Court of Appeal has made it clear now, that in appropriate circumstances the law may well impose on a parent company, responsibility for the health and safety of its subsidiary's employees. Does this pierce the corporate veil? The Court of Appeal 'emphatically rejects any suggestion that it is in any way concerned with what is usually referred to as piercing the corporate veil'. The court further stated that '...a subsidiary and its company are separate entities. There is no imposition or assumption of responsibility by reason only that a company is the parent company of another company. The question is simply whether what the parent company did amounted to taking on a direct duty to the subsidiaries' employees. The overriding message must be that if there is any degree to which a parent has some relevant or superior knowledge of health and safety in a particular industry, coupled with knowledge that a subsidiary's system of work is unsafe, and that it is foreseeable that the subsidiary or its employees would rely on the parent's superior knowledge, then it is not necessary to show that the parent is intervening in the running of the subsidiary. Of course, on the facts of this case it is highly relevant that Cape had employed medical and other officers responsible for safety issues for itself and the subsidiary. In essence, the corporate veil in these circumstances is pierced, but only on the basis of an existing concept of assumption of responsibility - Caparo Industries v Dickman 1990 - by its actions or knowledge. No doubt there will be cases which follow this and cases which are capable of being distinguished. The insurance angle Parent companies should review their existing claims portfolios with insurers to ensure that their employers' liability cover does in fact cover any potential liability. Other potential danger zones to look for from an insurance angle are: Is there sufficient cover in place? Does the parent carry a large deductible? Does the potential for such an argument in existing cases you have give rise to a 'circumstance', which might give rise to a claim triggering claims notification provisions in insurance policies? Indeed, is there an actual claim triggering notice provisions? Does this raise any potential non-disclosure issues for the parent company when renewing policies pending resolution of the claim i.e. should the claim be disclosed? What is the financial impact on premiums for your existing claims portfolios? If in any doubt, do immediately discuss issues with your broker and insurers alike. Final thought It is correct that this is one of the first cases in which an employee has established, at trial, liability to him on the part of his employer's parent company in this type of employers' liability case. However, until a similar case comes before the court, it is difficult to predict how the courts may interpret, apply or distinguish in the future. The real area of focus is assumption of responsibility, the parent's knowledge both express or implied, as well as looking at whether the parent has intervened in the health and safety policies or other aspects of the subsidiary.]]>{B5F32687-AE58-4C0E-A5D1-F1BA8267FB61}https://www.shoosmiths.co.uk/client-resources/legal-updates/liability-of-parent-companies-and-the-actions-of-their-subsidiaries-1498.aspxLiability of parent companies and the actions of their subsidiaries A long-awaited High Court appeal decision could have considerable implications for businesses. A long-awaited High Court appeal decision could have considerable implications for businesses, especially concerning the long held belief that a parent company as a separate legal entity from its subsidiaries could not be held responsible for the subsidiaries' failings or liability. The facts In the case of David Chandler v Cape Plc (Court of Appeal 2012 EWCA CIV 525), Cape has lost its appeal against the decision awarding David Chandler £120,000 compensation for his asbestosis after he was exposed to asbestos at a subsidiary company, Cape Building Products Limited. There was no doubt about the cause of Mr Chandler's asbestosis or that the subsidiary company had been negligent and in breach of its statutory duty in exposing Mr Chandler to asbestos. However, Cape Building Products no longer existed, and there were no employers' liability policies in place to cover the claim. It was a wholly owned subsidiary of Cape Plc, so Mr Chandler pursued his claim against the parent company. Decision at first instance The High Court judge applied a three-stage test when deciding whether Cape Plc should be liable for the actions of its subsidiary: Whether it was reasonably foreseeable to them as the Parent Company that Mr Chandler may suffer from an asbestos related illness. How close was the proximity between Cape Plc and Mr Chandler? In essence, was the business of the parent and subsidiary the same, did the parent have any superior knowledge of some relevant aspect of health and safety, did the parent know or ought to have known that the subsidiary's system of work was unsafe? Whether it was fair, just, and reasonable for the parent to owe a duty of care to an employee of its subsidiary company. The judge at first instance determined that Cape Plc had actual knowledge of Mr Chandler's working conditions, and so the risk of his suffering asbestosis disease was foreseeable. Further, it had employed scientific and medical officers responsible for health and safety issues, including those of the subsidiary companies, to ensure they were not exposed to harm. The appeal Cape Plc argued on appeal that it should not be liable, as it did not have complete control of the subsidiary company. This principal argument was rejected. In effect, it had extended its duty of care by the provision of the group-wide occupational health provisions. In other words, the appeal decision was founded on the basis of the common law concept of 'assumption of responsibility'. While the Court of Appeal accepted that Cape 'was not responsible for the actual implementation of the health and safety measures at Cape Products', Cape had assumed a duty of care either to advise Cape Products on what steps it had to take and to ensure those steps were taken. The Court of Appeal has made it clear now, that in appropriate circumstances the law may well impose on a parent company, responsibility for the health and safety of its subsidiary's employees. Does this pierce the corporate veil? The Court of Appeal 'emphatically rejects any suggestion that it is in any way concerned with what is usually referred to as piercing the corporate veil'. The court further stated that '...a subsidiary and its company are separate entities. There is no imposition or assumption of responsibility by reason only that a company is the parent company of another company. The question is simply whether what the parent company did amounted to taking on a direct duty to the subsidiaries' employees. The overriding message must be that if there is any degree to which a parent has some relevant or superior knowledge of health and safety in a particular industry, coupled with knowledge that a subsidiary's system of work is unsafe, and that it is foreseeable that the subsidiary or its employees would rely on the parent's superior knowledge, then it is not necessary to show that the parent is intervening in the running of the subsidiary. Of course, on the facts of this case it is highly relevant that Cape had employed medical and other officers responsible for safety issues for itself and the subsidiary. In essence, the corporate veil in these circumstances is pierced, but only on the basis of an existing concept of assumption of responsibility - Caparo Industries v Dickman 1990 - by its actions or knowledge. No doubt there will be cases which follow this and cases which are capable of being distinguished. The insurance angle Parent companies should review their existing claims portfolios with insurers to ensure that their employers' liability cover does in fact cover any potential liability. Other potential danger zones to look for from an insurance angle are: Is there sufficient cover in place? Does the parent carry a large deductible? Does the potential for such an argument in existing cases you have give rise to a 'circumstance', which might give rise to a claim triggering claims notification provisions in insurance policies? Indeed, is there an actual claim triggering notice provisions? Does this raise any potential non-disclosure issues for the parent company when renewing policies pending resolution of the claim i.e. should the claim be disclosed? What is the financial impact on premiums for your existing claims portfolios? If in any doubt, do immediately discuss issues with your broker and insurers alike. Final thought It is correct that this is one of the first cases in which an employee has established, at trial, liability to him on the part of his employer's parent company in this type of employers' liability case. However, until a similar case comes before the court, it is difficult to predict how the courts may interpret, apply or distinguish in the future. The real area of focus is assumption of responsibility, the parent's knowledge both express or implied, as well as looking at whether the parent has intervened in the health and safety policies or other aspects of the subsidiary.Fri, 04 May 2012 00:00:00 +0100<![CDATA[Paul Eccles ]]><![CDATA[ A long-awaited High Court appeal decision could have considerable implications for businesses. A long-awaited High Court appeal decision could have considerable implications for businesses, especially concerning the long held belief that a parent company as a separate legal entity from its subsidiaries could not be held responsible for the subsidiaries' failings or liability. The facts In the case of David Chandler v Cape Plc (Court of Appeal 2012 EWCA CIV 525), Cape has lost its appeal against the decision awarding David Chandler £120,000 compensation for his asbestosis after he was exposed to asbestos at a subsidiary company, Cape Building Products Limited. There was no doubt about the cause of Mr Chandler's asbestosis or that the subsidiary company had been negligent and in breach of its statutory duty in exposing Mr Chandler to asbestos. However, Cape Building Products no longer existed, and there were no employers' liability policies in place to cover the claim. It was a wholly owned subsidiary of Cape Plc, so Mr Chandler pursued his claim against the parent company. Decision at first instance The High Court judge applied a three-stage test when deciding whether Cape Plc should be liable for the actions of its subsidiary: Whether it was reasonably foreseeable to them as the Parent Company that Mr Chandler may suffer from an asbestos related illness. How close was the proximity between Cape Plc and Mr Chandler? In essence, was the business of the parent and subsidiary the same, did the parent have any superior knowledge of some relevant aspect of health and safety, did the parent know or ought to have known that the subsidiary's system of work was unsafe? Whether it was fair, just, and reasonable for the parent to owe a duty of care to an employee of its subsidiary company. The judge at first instance determined that Cape Plc had actual knowledge of Mr Chandler's working conditions, and so the risk of his suffering asbestosis disease was foreseeable. Further, it had employed scientific and medical officers responsible for health and safety issues, including those of the subsidiary companies, to ensure they were not exposed to harm. The appeal Cape Plc argued on appeal that it should not be liable, as it did not have complete control of the subsidiary company. This principal argument was rejected. In effect, it had extended its duty of care by the provision of the group-wide occupational health provisions. In other words, the appeal decision was founded on the basis of the common law concept of 'assumption of responsibility'. While the Court of Appeal accepted that Cape 'was not responsible for the actual implementation of the health and safety measures at Cape Products', Cape had assumed a duty of care either to advise Cape Products on what steps it had to take and to ensure those steps were taken. The Court of Appeal has made it clear now, that in appropriate circumstances the law may well impose on a parent company, responsibility for the health and safety of its subsidiary's employees. Does this pierce the corporate veil? The Court of Appeal 'emphatically rejects any suggestion that it is in any way concerned with what is usually referred to as piercing the corporate veil'. The court further stated that '...a subsidiary and its company are separate entities. There is no imposition or assumption of responsibility by reason only that a company is the parent company of another company. The question is simply whether what the parent company did amounted to taking on a direct duty to the subsidiaries' employees. The overriding message must be that if there is any degree to which a parent has some relevant or superior knowledge of health and safety in a particular industry, coupled with knowledge that a subsidiary's system of work is unsafe, and that it is foreseeable that the subsidiary or its employees would rely on the parent's superior knowledge, then it is not necessary to show that the parent is intervening in the running of the subsidiary. Of course, on the facts of this case it is highly relevant that Cape had employed medical and other officers responsible for safety issues for itself and the subsidiary. In essence, the corporate veil in these circumstances is pierced, but only on the basis of an existing concept of assumption of responsibility - Caparo Industries v Dickman 1990 - by its actions or knowledge. No doubt there will be cases which follow this and cases which are capable of being distinguished. The insurance angle Parent companies should review their existing claims portfolios with insurers to ensure that their employers' liability cover does in fact cover any potential liability. Other potential danger zones to look for from an insurance angle are: Is there sufficient cover in place? Does the parent carry a large deductible? Does the potential for such an argument in existing cases you have give rise to a 'circumstance', which might give rise to a claim triggering claims notification provisions in insurance policies? Indeed, is there an actual claim triggering notice provisions? Does this raise any potential non-disclosure issues for the parent company when renewing policies pending resolution of the claim i.e. should the claim be disclosed? What is the financial impact on premiums for your existing claims portfolios? If in any doubt, do immediately discuss issues with your broker and insurers alike. Final thought It is correct that this is one of the first cases in which an employee has established, at trial, liability to him on the part of his employer's parent company in this type of employers' liability case. However, until a similar case comes before the court, it is difficult to predict how the courts may interpret, apply or distinguish in the future. The real area of focus is assumption of responsibility, the parent's knowledge both express or implied, as well as looking at whether the parent has intervened in the health and safety policies or other aspects of the subsidiary.]]>{8D036AE6-E274-4CB4-9337-5C21BDA07346}https://www.shoosmiths.co.uk/client-resources/legal-updates/riots-and-insurance-qa-1502.aspxRiots and insurance: Q&amp;A Following some of the worst civil unrest for many years, we have looked at the urgent implications of submitting a claim to your insurers or your position where you carry a large excess, are underinsured or uninsured. Are you covered by insurance? Most policies today are 'all risks', so you should be covered. However, everything depends on your policy wording, so look at this carefully. Do not just look at 'riot'. Consider all relevant perils: fire theft riot, civil commotion and damage caused by malicious persons Do not assume that damage has been caused by riot just because your business has been looted or destroyed by fire/arson during recent events. The Home Office has not yet declared this a 'riot'. However, this is probably not necessary as many of these events do meet the criteria to be termed a riot. The principal question will be what has caused the loss? You may also be covered for interruption to trading and the cost of temporary relocation under the terms of your policy. Even if you have suffered no physical loss/damage, but you do not have access to premises, some business interruption policies will cover you for disruption to trade. Generally, business interruption claims can be complicated and you can consider, in the case of a large loss, appointing your own Loss Assessor. Vehicles should be covered if damage is caused by riot unless you self insure, carry a large excess or only carry third party cover. What do you do if you are insured? Reading the terms of your policy is a must. UK property policies usually require you to give immediate notice of any theft or malicious damage to the police and have a crime reference number. You should give immediate notice to your insurers that you will be making a claim and most policies will require you within seven days to deliver written details of the loss i.e. what you are claiming. This is usually particulars 'as are reasonably practicable'. So if your premises are cordoned off as a crime scene or for safety reasons and you have not yet been able to gain access to assess damage, do tell your insurers in your notification about your practical difficulties. Failure to notify can result in insurers declining to cover your losses. Within the next 48 hours we will be approaching the seven day point following the initial riots in Tottenham, so you must ensure that you comply. Do note that you may have longer if your loss is simply theft or fire, but given the undoubted many grey areas and access difficulties preventing many from determining what has happened to their businesses, do not assume you have more time. Communication with insurers through your broker or direct is key here, giving them as much information about the circumstances and extent of your losses as you can. You must look at how claims must be notified, for example by claim form, written particulars etc set out in plain language under the 'claims conditions' or 'claims notification conditions' in your policy. Insurers will appoint forensics and loss adjusters to assess claims so you are more likely to deal direct with an adjuster who will seek full co-operation from you to provide particulars of the loss. You must co-operate with all reasonable requests in a timely fashion or risk your insurer declining cover. Again consider having your own Loss Assessor in cases of a large loss. What if you carry a large excess or are uninsured/underinsured? You may have a claim under the Riot Damage Act 1886 against the police. The Home Office has not yet declared the 'rioting' as a riot under the terms of the Act. However, this may not be necessary as there are other legal definitions available as to what constitutes a riot. If you wish to preserve a right to claim then notice must be given to the police within 14 days. You do this by notifying your local Compensation Police Authority and completing a claims form. Please note that the Prime Minister has just announced in the Commons that he will extend this time limit to 42 days for any legitimate compensation claims. If you are partially insured because of a large excess or where you are uninsured/underinsured, you should notify both the Police Authority and your insurers, as above. Final thought Do spend the time getting this initial claims process right. Failure to do so could cause you severe difficulties later on. In the event of any damage to your premises, you may be required under the terms of your lease to notify your landlord. However, it would be prudent to make such notification to such landlords as soon as possible, regardless of the lease provisions. Do not be led by the media in terms of what the Government can and cannot do or rely on this when making an insurance claim. Do report your loss to the Police immediately. Do consider the later PR and corporate responsibility impact on your brand if you submit a claim to the Police Authority. The Association of Police Authorities has understandably raised concerns about police funds being 'decimated' at a time of severe cuts to their budgets. However, if you carry insurance, your insurers are likely to give notice that they intend to make a claim to the Police and you may not have any basis to prevent them from doing so. The Association of British Insurers' reaction to police concerns to date was '.this legislation has stood the test of time for 125 years', (source BBC News). Contact If you need immediate advice or assistance, please contact Paul Eccles, Head of Commercial Insurance, on 03700 86 8741 or paul.eccles@shoosmiths.co.uk Useful websites www.abi.org.uk - Association of British Insurers www.thompsonandbryan.com - loss assessorsThu, 11 Aug 2011 00:00:00 +0100<![CDATA[Paul Eccles ]]><![CDATA[ Following some of the worst civil unrest for many years, we have looked at the urgent implications of submitting a claim to your insurers or your position where you carry a large excess, are underinsured or uninsured. Are you covered by insurance? Most policies today are 'all risks', so you should be covered. However, everything depends on your policy wording, so look at this carefully. Do not just look at 'riot'. Consider all relevant perils: fire theft riot, civil commotion and damage caused by malicious persons Do not assume that damage has been caused by riot just because your business has been looted or destroyed by fire/arson during recent events. The Home Office has not yet declared this a 'riot'. However, this is probably not necessary as many of these events do meet the criteria to be termed a riot. The principal question will be what has caused the loss? You may also be covered for interruption to trading and the cost of temporary relocation under the terms of your policy. Even if you have suffered no physical loss/damage, but you do not have access to premises, some business interruption policies will cover you for disruption to trade. Generally, business interruption claims can be complicated and you can consider, in the case of a large loss, appointing your own Loss Assessor. Vehicles should be covered if damage is caused by riot unless you self insure, carry a large excess or only carry third party cover. What do you do if you are insured? Reading the terms of your policy is a must. UK property policies usually require you to give immediate notice of any theft or malicious damage to the police and have a crime reference number. You should give immediate notice to your insurers that you will be making a claim and most policies will require you within seven days to deliver written details of the loss i.e. what you are claiming. This is usually particulars 'as are reasonably practicable'. So if your premises are cordoned off as a crime scene or for safety reasons and you have not yet been able to gain access to assess damage, do tell your insurers in your notification about your practical difficulties. Failure to notify can result in insurers declining to cover your losses. Within the next 48 hours we will be approaching the seven day point following the initial riots in Tottenham, so you must ensure that you comply. Do note that you may have longer if your loss is simply theft or fire, but given the undoubted many grey areas and access difficulties preventing many from determining what has happened to their businesses, do not assume you have more time. Communication with insurers through your broker or direct is key here, giving them as much information about the circumstances and extent of your losses as you can. You must look at how claims must be notified, for example by claim form, written particulars etc set out in plain language under the 'claims conditions' or 'claims notification conditions' in your policy. Insurers will appoint forensics and loss adjusters to assess claims so you are more likely to deal direct with an adjuster who will seek full co-operation from you to provide particulars of the loss. You must co-operate with all reasonable requests in a timely fashion or risk your insurer declining cover. Again consider having your own Loss Assessor in cases of a large loss. What if you carry a large excess or are uninsured/underinsured? You may have a claim under the Riot Damage Act 1886 against the police. The Home Office has not yet declared the 'rioting' as a riot under the terms of the Act. However, this may not be necessary as there are other legal definitions available as to what constitutes a riot. If you wish to preserve a right to claim then notice must be given to the police within 14 days. You do this by notifying your local Compensation Police Authority and completing a claims form. Please note that the Prime Minister has just announced in the Commons that he will extend this time limit to 42 days for any legitimate compensation claims. If you are partially insured because of a large excess or where you are uninsured/underinsured, you should notify both the Police Authority and your insurers, as above. Final thought Do spend the time getting this initial claims process right. Failure to do so could cause you severe difficulties later on. In the event of any damage to your premises, you may be required under the terms of your lease to notify your landlord. However, it would be prudent to make such notification to such landlords as soon as possible, regardless of the lease provisions. Do not be led by the media in terms of what the Government can and cannot do or rely on this when making an insurance claim. Do report your loss to the Police immediately. Do consider the later PR and corporate responsibility impact on your brand if you submit a claim to the Police Authority. The Association of Police Authorities has understandably raised concerns about police funds being 'decimated' at a time of severe cuts to their budgets. However, if you carry insurance, your insurers are likely to give notice that they intend to make a claim to the Police and you may not have any basis to prevent them from doing so. The Association of British Insurers' reaction to police concerns to date was '.this legislation has stood the test of time for 125 years', (source BBC News). Contact If you need immediate advice or assistance, please contact Paul Eccles, Head of Commercial Insurance, on 03700 86 8741 or paul.eccles@shoosmiths.co.uk Useful websites www.abi.org.uk - Association of British Insurers www.thompsonandbryan.com - loss assessors]]>